By Erik Clarke

State and local governments across the country rely heavily on nonprofit partners to deliver social-service programs. When these partnerships work well, they expand reach and improve outcomes for vulnerable communities. When oversight is weak, the consequences can be severe. The scale of the fraud case unfolding in Minnesota is a stark reminder of how quickly taxpayer dollars can be misused when accountability systems fail.

As of December 2025, federal prosecutors have charged more than 70 defendants in Minnesota with allegedly stealing about $250 million from federal child nutrition programs. Organizations involved in the scheme claimed to be serving thousands of meals per day to low-income children, but investigators found many of those meals never existed. False invoices, fabricated data, and nonexistent service sites were allegedly used to extract large volumes of public money. Funds intended to feed children were instead spent on luxury homes, high-end cars, foreign properties and shell companies.

The case may feel distant from Colorado, but the underlying vulnerabilities exist in every state and city across the country. Colorado and Denver manage a wide range of publicly funded partnerships with nonprofit organizations across housing, youth development, food assistance, behavioral health, workforce training, and more. Most organizations perform their work responsibly and deliver real value to the people they serve. The risk lies in self-certified reporting, outdated or inaccurate data systems, limited onsite verification, and fragmented or unclear oversight responsibilities.

Strong program integrity depends on accurate, timely and standardized data reporting. Grantors need reporting structures that make inconsistencies visible. When outcomes and expenditures can be cross-checked through digital reporting, independent records and third-party analytics, risks become far more manageable. These tools are essential for oversight teams to actively monitor programs.

In-person verification is equally important. Many of the red flags in Minnesota could have been identified earlier by observing operations or confirming basic facts about program delivery. Site visits and direct confirmation of service levels are essential components of accountability whenever public dollars flow to third-party organizations.

Colorado and Denver should learn from Minnesota’s experience. Whenever large volumes of funding move between public entities and third-party providers, strong oversight is essential. Nonprofits vary widely in size, maturity and operational capacity, creating opportunities for legitimate errors, control weaknesses, and, in some cases, fraud.

This is also why we have independent oversight functions in the Denver Auditor’s Office and the Office of the State Auditor. These offices hire professionals with experience assessing government programs and bringing to light waste, fraud, abuse, and opportunities for improvement through performance auditing.

The point of examining Minnesota’s failure is not to cast suspicion on Colorado’s nonprofit community or on the practice of using public grants to serve people in need. The purpose is to emphasize public trust and program performance rely on strong oversight. When data is reliable, verification is effective, and performance audits test whether programs are delivering for taxpayers, the entire system operates more efficiently and effectively.

Throughout my career, I’ve managed large-scale audit programs for public organizations and major institutions. I’ve led multi-disciplinary teams that identified waste, weaknesses and systemic risks across complex operations. The lessons from those engagements are remarkably consistent. Without modern data systems, verification, and clear accountability, problems go undetected. Performance audits are one of the most effective tools for reducing risk and improving results. The Minnesota case demonstrates how unaddressed vulnerabilities can play out at scale.

Colorado’s public agencies and nonprofit partners work hard to meet community needs. Strengthening oversight is a way to protect that critical work. When programs are well-managed, when results and spending are verified, and when public dollars are safeguarded, we all benefit.

Erik Clarke is a finance and audit executive in the private sector and was formerly in management roles at large accounting firms with a focus on internal auditing. His experience includes overseeing major performance audit programs of public agencies at the local, state and federal levels.