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Yahoo
30-04-2025
- Business
- Yahoo
Indiana Economic Development Foundation releases annual audits on Gov. Braun's demand
Former Indiana Gov. Eric Holcomb, former IEDC leader David Rosenberg and the Hoosier State's delegation meet with Flanders Minister-President Jan Jambon on June 4, 2024 in Belgium. The agency's foundation footed the bill for this and other economic development trips. (From Holcomb's official Flickr) The Indiana Economic Development Foundation has poured more than $13 million into travel, administrative and other expenses across six years, according to audited financial reports released Thursday under Gov. Mike Braun's orders. The little-known foundation is charged with raising private funds to boost the controversial Indiana Economic Development Corp. But the nonprofit is on a spending freeze. State freezes funding for economic development affiliate, promises audit Indiana had a traditional commerce department until 2005. That's when, under former Gov. Mitch Daniels, lawmakers created the IEDC: 'a body politic and corporate, not a state agency but an independent instrumentality exercising essential public functions,' per Indiana Code. They allowed its board to create a subsidiary: the foundation. 'Everybody always thinks that the tax dollars are going in one direction: they're going out to nonprofits to subsidize nonprofit activity,' said Indiana University Professor Beth Gazley, a nonprofit management specialist. 'But actually, there's a lot of money coming back from nonprofits to subsidize government activities,' she continued, noting that the federal definition of a 501(c)(3) tax-exempt nonprofit includes 'lessening the burdens of government.' The IEDC's furtive efforts to secure water, land and more for a contentious technology park have made it plenty of enemies since 2022. But now, its problems go beyond public relations. Braun said Thursday that he's ordered a forensic audit and reported 'impropriety, or even the appearance of it' to Indiana's Office of Inspector General amid allegations of self-dealing and more, first reported by Indiana Legislative Insight. And he's taken aim at the foundation. In an April 9 news release, his administration called out the foundation for not filing six years of required audited financial reports with the State Budget Committee. Two weeks later, the lapses were cured and the reports available online. A spokesperson for the quasi-public agency didn't immediately answer Capital Chronicle questions, including why those records weren't submitted. The newly released reports show that the foundation spent $13.2 million from the 2019 through 2024 fiscal years, which begin July 1 and end June 30. The bulk of that, $10.9 million, went to travel, meals and entertainment. Years worth of news releases indicate the foundation has paid for virtually all of the international economic development trips taken by prior governors. The independent auditor used for the most recent three reports — Indianapolis' Katz, Sapper & Miller — also included conferences in this category, while the previous one — Missouri's former BKD — did not. 'Is that a lot of money to be spending on conferences, travel, meals and entertainment? That really depends on the programmatic goals of the organization, the mission of the organization,' Gazley said. 'And only the board can decide: is that the best use of our funding?' The IEDC and its foundation share the same staff and 12-member board. Gazley also said it's 'best practice' to change auditors over time. Get too 'close and clubby' and risk the auditor 'not being honest anymore about the financial status of the organization,' she warned. Another $1.8 million was logged for administrative expenses, plus more than $200,000 for sponsorships. Nearly $300,000 was categorized as 'other' spending. The foundation didn't immediately answer a question about what kinds of expenditures would fit within this category. The reports also disclose about $11.7 million in donations. But they offer no clues as to the identity of those donors. Indiana Code forces the foundation to redact donor names out of public records if they request anonymity at any point in time. Most do. The groups behind 14 of 16 transactions from 2020 through 2022 were shielded from records obtained in 2023 by the Capital Chronicle. Two didn't request anonymity: District of Columbia-based think tank The Urban Institute donated $5,000 in 2021, and the Battery Innovation Center in Newberry gave $12,000 in 2022. Between 2015 and 2025, the center nabbed six incentive contracts that total $18 million, according to the IEDC's transparency portal. At the time, spokeswoman Erin Sweitzer wrote that private donations 'allow more flexibility in how we use the funds and how quickly we're able to access them.' For Gazley, that doesn't add up. 'I don't see how you can defend privacy as a programmatic priority, or a mission-related priority. You just can't,' she said. 'But privacy does make a lot of organizations more viable if their donors are concerned about having their (donation) choices on the front page of the newspaper.' 'The kinds of accountability tools that we have for the public with, if I ordered them in priority, transparency would be at the top of the list. And I think it should be at (the) top of everybody's list,' she added later. But there are indications of who other foundation givers may be — and evidence several have dealings with the IEDC. Organizations can donate money, sponsor events or provide in-kind services. CONTACT US A webpage for the foundation identifies the state's 'big five' investor-owned utilities — AES Indiana, CenterPoint Energy, Duke Energy, Indiana Michigan Power and the Northern Indiana Public Service Company — as 'contributors.' AES logged $10 million in professional services contracts that expired in 2023 and about $2.8 million in incentive contracts from 2014, according to the portal, while Duke earned about $150 million in an incentive contract from 2010. Incentives are performance-based, so a recipient may not earn the full amount if its targets aren't met. Nine other organizations are dubbed 'sponsors' on the webpage. They include Old National Bank, Pure Development, Rolls-Royce, Hoosier Energy, Solv Energy, Doral Renewables, railroad giant Norfolk Southern, workforce development consultant TPMA, and Indiana University's Ventures startup affiliate. Pure Development holds a $94.4 million contract for development work. Rolls-Royce received $21,000 after co-sponsoring a Northwest Stadium suite with IEDC for an Army-Navy football match in December and racked up 14 incentive contracts — worth $74.6 million — between 2011 and 2022. Doral Renewables, meanwhile, is the recipient of two pending incentive contracts totaling $1.5 million. TPMA was recorded as having three service contracts — for almost $190,000 — expiring between 2019 and 2025, and two 2015 incentive contracts worth nearly $400,000. There's also more information on the way. Though the foundation secured an exemption from the Internal Revenue Service in 2012 for future filings of the Form 990, Braun has directed it and other state-affiliated nonprofits to file them annually, regardless of any exemptions. The form describes funding sources and amounts, and how much has been spent on programming versus administrative expenses. All required reports going back 10 years are due by the end of 2025 under his executive order. They must also be 'clearly posted' online 'for Hoosiers to read for themselves,' according to a news release. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
09-04-2025
- Business
- Yahoo
Gov. Mike Braun demands disclosure by state-affiliated nonprofits
Former Gov. Eric Holcomb on a trade mission to Germany and Switzerland funded by the Indiana Economic Development Foundation in 2022. (Photo from IEDF) A secretive state-affiliated nonprofit aiding economic development efforts would have to disclose its funders — retroactively and into the future — under an executive order signed by Gov. Mike Braun Tuesday. 'If organizations like the Indiana Economic Development Foundation were created to assist state agencies with public business, then Hoosiers need full transparency into how these nonprofits operate, who funds them, and what they do with the money,' Braun, a Republican, said in a news release. 'Today's executive order mandates that these organizations file financial disclosures — including those missed over the past 10 years — so Hoosiers can have full transparency and accountability,' he continued. The Indiana Economic Development Foundation (IEDF) operates in conjunction with the controversial Indiana Economic Development Corp. (IEDC), a quasi-public state agency. Indiana had a traditional commerce agency until 2005, when then-Gov. Mitch Daniels, a Republican, signed into law legislation creating the IEDC. Shortly after, leaders created the corresponding IEDF, a 501(c)(3) nonprofit organization. The agency and its foundation operate as a public-private partnership. The foundation has paid for virtually all the international travel for prior governors on economic development trips. Initially, some donor information was provided. But, in recent years, the foundation has refused to disclose such details. It does identify some contributors and sponsors on its website, including the state's 'big five' investor-owned utilities: AES Indiana, CenterPoint Energy, Duke Energy, Indiana Michigan Power and the Northern Indiana Public Service Company. But how much they give is kept secret. In 2023, the Capital Chronicle found that outside organizations donated nearly $3 million to the foundation over three years. But who the donors are — and how the agency spends their contributions — is largely unknown. State rules don't require or outright prohibit disclosure of that information. A little-known nonprofit boosts Indiana's economic development agency The groups behind all but two of 16 transactions in records from 2020 through 2022, obtained by the Capital Chronicle, were permitted anonymity. Two didn't request anonymity: Washington, D.C.-based think tank The Urban Institute donated $5,000 in 2021, and Indiana's Battery Innovation Center, in Newberry, gave $12,000 in 2022. The IEDF also said that, because the funds are private donations, how they're spent isn't subject to public records rules. Julia Vaughn, executive director of watchdog group Common Cause Indiana, said the executive order is an acknowledgment that the IEDC and its foundation have, 'for many years, operated behind an opaque curtain of darkness that has created distrust of the agency and its actions.' 'This is a positive step to bring much needed transparency to the IEDC and the projects it supports,' she added. Braun's release said the state has created numerous nonprofit groups to supplement agencies, like the Healthy Hoosiers Foundation, Indiana Destination Development Foundation, Indiana State Museum Foundation and more. All government-affiliated non-profits need to file a Form 990 annually with the IRS that describes where their funding sources, how much they brought in, and how the dollars break down between programs and administrative expenses. This form provides Hoosiers with important transparency into these organizations. But in 2012, the IEDF got an exemption from the IRS for future filings of the form, according to the release. State-affiliated foundations are also required to file annual reports with the State Budget Committee — which the IEDF has not done since 2019. Braun directed all state-affiliated foundations to comply with reporting requirements, including filing any previously missed reports from the past decade, by the end of the year. They must additionally file Form 990s annually, even if they have previously been granted an exemption, retroactive 10 years. The forms 'must be clearly posted on the relevant agency's website for Hoosiers to read for themselves,' the release says. The governor also signed two other executive orders Tuesday changing Indiana's approach to economic development. One is to reassess the economic development regions in the state and better capitalize on regional strengths. Braun said he wants to spread out economic development efforts geographically, 'and one important way we're doing that is starting from scratch on the map of our state's economic development regions to better reflect each area's strengths.' His order empowers Commerce Secretary David Adams to make recommendations on the redrawing of regional economic development and workforce maps based on an area's 'unique' strengths, assets, workforce capabilities, natural resource and industries. The second executive order focuses on wage growth and job creation in measuring how effective the state's economic development strategy is. Those numbers will go in all project proposals and performance reports related to state-supported economic development initiatives. 'Indiana is focusing our economic development efforts on the things that affect your family the most: raising wages and new job opportunities. More jobs, and higher pay: that's our North Star,' Braun said in the release. Former Gov. Eric Holcomb's administration focused on capital expenditure and investment totals. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
