Southwest Initiative Foundation President Scott Marquardt attended Monday’s special Balaton City Council meeting in an effort to provide some much-needed clarity to an issue surrounding monies being funneled to and from The Borchert Challenge.
“We want to make sure the City of Balaton has the information it needs to utilize the generosity that’s been put forth,” Marquardt told the council. “My hope tonight is for everyone to leave (the meeting) with clarity on what the dollars are going forward and perhaps dive into what happened prior to that.”
On May 30, 2023, a fund agreement was made between the Challenge and SWIF, meaning any dollars earmarked for the fund that SWIF receives on that date, or since then, become part of an endowment; all endowments are regulated by the State of Minnesota.
“The way the Borchert Fund was set up at Southwest Initiative Foundation is an endowment for the goal of perpetuity,” said Marquadt. “It was designed to be (for the) long-term. For our purposes, any gifts that came to the Southwest Initiative Foundation on or after (May 30, 2025) would be subject to the federal and state laws that manage that.”
Marquardt said he is ethically and legally obligated to follow what the intent is of the fund that was set up.
“It was a very clear three-line paragraph that says 100% of the distributions are to help maintain and improve high standards for the parks of Balaton,” said Marquardt. “You have discretion as to how you apply to that. If it’s related to park-related thing, you have the discretion to be able to do that.”
Marquardt said a gift to SWIF came in June 2023, and the only outbound monies paid was $714.72 to the City of Balaton last October.
Marquardt said any funds collected are subject to endowment rules. The City doesn’t automatically receive a check every year of what its share is; it needs to be requested by an authorized City official, Marquardt said.
Prior to May 20, 2023, Marquardt said it is SWIF’s understanding that the City received some gifts from community members in the name of The Borchert Challenge Fund.
“Both the money that went to the City and the money going to us having the same name is causing community confusion,” Marquardt said. “If money does stay with the City, I would encourage all of us to differentiate a little better.
Marquardt said any gifts that come in for The Borchert Challenge now are going to be deposited and subject to SWIF’s endowment rules. If the City receives a gift and deposits it into that account, “it gets very complicated for us to then receive it, because the chain is broken,” he said. “It behooves all of us, if any money is raised going forward, in an ideal world it comes to us.”
The City currently has $4,032.56 in a project fund; the City can choose to put that into the endowment fund, but it would then lose access to it.
“Are you keeping that project fund until it spends out, or would you like to blend it into ours?” Marquardt added. “Under law, the City would be the donor, not the people who gave it. Whoever those donors were, they’re not going to get a receipt from us. Legally, the City would be the donor.”
Council member Tracy McCloud made a motion to transfer $3,317.84 ($4,032.56 less the $714.72 that went back to the City) over to SWIF, and the motion passed unanimously. Since those monies will be endowed, the City cannot request any portion of it for a future project.
Any check that is brought to the City, Marquardt said, should me made out to SWIF, with “The Borchert Challenge Endowment” written in the memo line.
“If you put the purpose on it, it’s clear to us,” said Marquardt.
After the roughly 45-minute discussion, Marquardt expressed his appreciation of the volunteers and donors for their fundraising efforts.
“This is a place that generosity just flourishes,” he said. “As complicated as this conversation was, the history from the Community Foundation is pretty substantial. You’ve got something really special here to be proud of. It’s a great regional story for why people would want to come to southwest Minnesota.”
In other news from Monday …
• The council accepted a $1,065.65 donation from the Steve Miller trust to be put toward the Balaton Ambulance service.
• The council established a fence permit fee of $25.
• The council approved a site lease agreement with Hoek Outdoors.
• The council held a discussion concerning dangerous or potentially dangerous dogs within City limits, but tabled further talks and any decision until a meeting to be held in December.
• The council OK’d a service agreement with ISG Engineering at a cost of $85 per hour.
