Rochester Area Foundation takes on nonprofits orphaned by Diversity Council closure
Weeks after Rochester’s Diversity Council dissolved, the 11 local nonprofits that it worked with have found a new fiscal sponsor: Rochester Area Foundation.
ROCHESTER — Weeks after Rochester’s Diversity Council dissolved , the 11 local nonprofits that it worked with have found a new fiscal sponsor, the Rochester Area Foundation.
“We have signed agreements with 10 groups and the 11th will be signed next week,” said Foundation President Jennifer Woodford. “These are all organizations already doing incredible work in our community. And our mission is to build a better community for all.”
The Diversity Council announced that it was ending operations at the end of February, which made the 11 diversity-focused groups “orphans” as the Diversity Council controlled their finances. Members of the Diversity Council's board sent out an email today stating that the situation has finally been resolved.
"As of today, all active (fiscal sponsored organizations) have found a new home, and a transfer of funds with 100% of their money has been sent to that new organization," wrote the Diversity Council leadership in an email.
Those small nonprofit groups include:
- Compassionate Rochester.
- InMN C.A.R.E.S.
- Pamoja Women.
- Rochester Cambodian Association.
- Rochester Vidhyalaya.
- Southeast MN Food Rescue and Redistribution.
- Southeastern Minnesota Interfaith Immigrant Legal Defense.
- Somali Health Advisory Committee.
- Three Rivers Restorative Justice.
- Together Against Breast Cancer.
Kim Sin, who leads the Rochester Cambodian Association, said this is good news for his group that former during the early days of the pandemic.
“We are very excited about this opportunity to work with the Rochester Area Foundation. This will allow us to continue,” he said. “Now we can focus on the next step and decide on the direction of where we are going next.”
Woodford explained that the Diversity Council did take on the fiscal sponsorship for these 11 groups, because the Foundation was previously at capacity for sponsoring nonprofits.
“It does take a lot of work to do this. Before we had decided to keep our sponsorship for four to six nonprofits. Since then, we have added more staff,” she said. “So we were able to say yes to sponsoring more groups in this emergency situation.”
This is the latest development in the story of the turmoil at Rochester’s Diversity Council and its eventual closure.
In January, the Diversity Council board abruptly terminated its executive director, Dee Sabol, in the wake of the mass exit of four employees in 2022. The board then announced in February that the Diversity Council would no longer act as the fiscal sponsor for 11 local diversity nonprofits.
The final shoe dropped a few days after that statement when the Diversity Council board announced that it was shutting down after 34 years of working with marginalized communities and trying to make the local area more welcoming.
Another part of the story was a $50,000 bridge loan that the Diversity Council received from St. Paul-based Propel Nonprofits in December. Some have pointed to Sabol and that loan as tying up the organization’s finances and harming the 11 groups that it fiscally sponsored.
“The misconception that's being perpetuated is that funds that belonged to someone else were being used and were not made available to the organizations. That's 100% not true,” said Sabol recently.
She explained that the loan was necessary to the organization having an end of the year cash flow problem. Propel is an organization that works with nonprofits and it presented them with a loan with a flexible payback plan, she said.
During the seven years that Sabol led the organization, revenue at the Diversity Council generally grew with some fluctuations, according to its filings with the IRS from 2017 to 2021.
In 2017, the organization reported revenues of $289,029 and five employees. By 2021, the revenues had grown to $852,969 with 15 people working at least part time at the Diversity Council.
Sabol acknowledged that the organization went through a very difficult time when she was away from work dealing with her husband’s medical issues during a time when some new employees were being on-boarded. Four staffers eventually left causing a large disruption.
“It was incredibly traumatic time for everyone on the staff,” she said.
While the organization did fold soon after she was terminated, Sabol said always supported the work of the Diversity Council.
“My heart and soul have been with this organization for a long time. I never stopped pushing for it. I would never do anything to harm it or its mission,” she said.