The Minnesota Zoo has not been properly reporting the donations it receives from the public, according to a state audit released Wednesday.
The Office of the Legislative Auditor, which reviewed some of the zoo's finances over the past four years, said the zoo didn't properly account for the money it got from donations and didn't have the controls in place to ensure it had been spent in the way donors were promised.
The audit also found that the zoo regularly extended contracts with its three major vendors without soliciting public bids. The zoo also gave some of its employees free tickets to an annual concert series at the zoo, a violation of state laws that prohibit employees from accepting gifts from vendors, according to the audit.
The issues could be cleaned up with tighter controls and clearer documentation of how donated money is kept and spent, said Chris Buse, deputy legislative auditor.
"We certainly didn't see any evidence of fraud, waste or abuse, or an intent to misspend any money," Buse said. "Just that there are some opportunities to clean up controls."
Tracking the zoo's finances is more complex than at most state agencies because it works in partnership with a private foundation called the Minnesota Zoo Foundation.
Both the foundation and the zoo have the same president, John Frawley, but they operate under separate boards.
State law requires that any donations to the zoo be kept in a state treasury account overseen by the zoo's board. But almost all of the zoo's fundraising is run by the private foundation.
The foundation has been collecting and overseeing the donations, including those given through the zoo's website, according to the audit. The foundation then gives the donated money to the zoo based on project needs or donor wishes.
Annual attendance at the zoo is about 1.3 million and has been increasing in recent years. It had $28 million in revenue in 2017. The Zoo Foundation had $5.9 million in revenue in 2017, and contributed just under $2 million to the zoo.
Zoo officials said they are following the law. Donations to the foundation, a private entity, don't fall under the state's jurisdiction. But once that money is given by the foundation to the zoo it is kept in the proper treasury account, said Abigail Mosher, the zoo's chief financial officer.
"This is a long-standing practice. The zoo and foundation have been very transparent about it," Mosher said.
The zoo has been partners with a private foundation since the 1970s.
But language on the zoo's website and in other soliciting efforts can make it unclear to donors if they are giving directly to the zoo or to a private foundation, Buse said. Recording the donated money under the foundation makes it hard for lawmakers and the public to know how much money is on hand to operate the zoo, he said.
"Our recommendation is flexible," Buse said. "If the zoo feels like its process is better they can work with policymakers to change the way the law is written. But this is the way the law is written now."
The zoo did not dispute the audit's findings that contracts were not put out to bid often enough and that employees should not be given free concert tickets.
A contract with the zoo's primary food vendor hasn't had a single competitive bid in 27 years. The contract to run the zoo's annual concert series has gone out to bid five times in 26 years. The zoo's gift store operators have won just one competitive bid in the past 17 years, according to the audit.
All three contracts will be rebid in the coming years, zoo officials said.
Star Tribune reporter Liz Sawyer contributed information for this report. Greg Stanley • 612-673-4882