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When Scott Artley, executive artistic director of Patrick’s Cabaret, inquired about why the Laura Jane Musser Fund denied his group’s 2015 grant proposal to help fund opportunities for guest curators, he was “shocked” by the response.

The Musser Fund, a private family foundation based in Minneapolis, allegedly told Artley in a voice mail that one reason it was rejected was because the board is “conservative” and they “have grappled” with “ ... whether they want to consider GLBT issues as something that they want to address” in awarding grants.

“I played the voice mail out loud and after it finished, my intern turned around and asked, ‘What year is it?’ ” Artley said Wednesday.

Artley filed a discrimination charge with the state Department of Human Rights against the Musser Fund in November, alleging that the philanthropy organization “violated certain provisions of the Minnesota Human Rights Act” by refusing to “accept its proposal and provide funding because [Patrick’s Cabaret] is associated with the gay, lesbian, bisexual and transgender community,” according to the charge.

The two parties reached a settlement on Aug. 4, following two days of mediation.

“The Musser Fund made no omission of any liability that their grant decisions were based on any discriminatory factors,” said Neal T. Buethe, the fund’s attorney, on Wednesday. “We did settle the case because we tried to make it a positive and made sure diversity is built into the grant application process and ensure that Musser Fund is responsive to the concerns this charge embodied.”

As part of the settlement, the Musser Fund paid Patrick’s Cabaret $12,000. It also agreed to diversity training and updating its policy to highlight the impact of diversity in a grant application.

“We are not privy to the Musser Fund’s staff and board conversations leading to funding decisions, but regardless of past grant decisions, discrimination can take place at any point. We feel confident, however, that the Musser Fund has sought to improve its practices because of our intervention,” Patrick’s Cabaret said in a news release.

Patrick’s did win a $5,000 grant from the Musser Fund in 2011 to support a High Schools Cabaret program.

‘A brick wall’

It was October 2015 when Patrick’s Cabaret submitted a grant proposal to Musser’s Intercultural Harmony program. Patrick’s sought money to bring its guest curators together through informal and formal social opportunities and for leadership exercises, Artley said.

In December 2015, the Musser Fund informed Patrick’s Cabaret that its proposal was rejected.

Artley e-mailed the Musser Fund grants program manager for feedback in September 2016 so they could have a “more competitive grant proposal” when applying in the next round.

The grant manager left a voice mail:

“What I want to tell you about Patrick’s Cabaret and being turned down with the Intercultural Harmony work, is a couple things. One is this is a pretty conservative board and they have grappled with the, whether they want to consider GLBT issues. ... And so you may be throwing good energy against a brick wall in applying if your Intercultural Harmony work is addressing GLBT issues,” the manager said, according to a transcript of the voice mail Artley provided to the Star Tribune.

“It was a choice of words that may have left a wrong impression,” Buethe said Wednesday. “Those words were taken out of context. There’s more to it. ... The grants fund administrator looked at it based on the criteria for the grant and thought it wasn’t a fit.” And the grant proposal didn’t even make it to the board, he added.

In agreeing to a settlement, “we took this as an occasion to talk about diversity and address it,” Buethe said.

News of the agreement spread among Twin Cities arts groups.

The Lake Street Arts Council said on Facebook: “We stand for art and equity! Congratulations to Patrick’s Cabaret for settling with this foundation in a way that includes education and systems changes!”

Karen Zamora • 612-673-4647

Twitter: @KarenAnelZamora