It's high time an attorney general took on the Bremer Foundation: Here's why

It's refreshing to see Keith Ellison, as the chief law enforcement officer of Minnesota, exercising oversight in the Bremer Trust and Bremer Financial conflict. The attorney general's role is key and here's why.

Charitable trusts are supervised by the state attorney general to determine that they operate within the laws set forth by Congress. Although wrapped in good intentions, some (not all) of these trusts were set up as tax dodges to avoid estate taxes, or to control a private corporation long after a founder's death, as is the case with Otto Bremer.

In 1969 the Congress put its foot down. It enacted four major reforms: Foundations cannot control more than 20% of a company; they cannot provide excessive compensation to the foundation officers; foundations must follow the "prudent man" rule, which dictates diversifying investments to guard against a sudden crash in any single business sector (like banking); and finally, foundations must pay out not less than 5% of their asset value each year.

Congress was clear. But it relies on state attorneys general to oversee these reforms.

Enter Ellison. Unlike his predecessors, Lori Swanson and Mike Hatch, Ellison has stepped up to exercise his duty. First, he is asking the judge to appoint three interim trustees to curtail clear abuses, such as salaries and perks in advance of $550,000 per year. Charitable foundations were set up to serve charitable purposes, not to enrich the trustees who were in charge.

Ellison needs to go one step further. He must separate the trust from the banking business. But wait, you say: Otto Bremer wanted it to be this way in 1941, when he set up the charity. Yes, this was the donor's intent. But today there are changed circumstances, mainly the 1969 reforms in federal law mentioned above, which prevent foundations from controlling private businesses.

Thousands of private foundations complied with this federal law. The Ford, Kellogg, McKnight, Bush, Hill and Blandin foundations all complied. And corporate America is better for it.

Pre-reform practices were "crony capitalism" at its worst. For example, Henry Ford put all the voting stock into the Ford Foundation, composed of Ford family members so that other stockholders had no voice in the corporation's affairs. The list of other abuses is staggering.

The banking world here in Minnesota will continue in good standing if the Bremer Trust and Bremer Banks are cleanly and clearly separated. And if the Bremer Banks are sold, especially at the price recently touted by the three trustees, the amount of annual payout would increase from $50 million to over $100 million.

Now wouldn't Otto Bremer be smiling if he knew that his beloved legacy was serving communities across Minnesota with $100 million annually. Think for how this infusion could help schools across the state deal with the COVID-19. Or with race relations. Or health care. Or child care. Or …

Paul Olson is a retired president of the Blandin Foundation. He can be reached at pmolson27@gmail.com.