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MDHHS created a nonprofit, and contracts with it to produce research and other projects.
No one will be surprised to hear that this cost taxpayers millions. Or that some of those millions were inappropriate. Or that some of the projects are overtly "Woke."
The astounding thing is the original act making this legal in Michigan. In what universe of limited government is it constitutional for a department of state to create a nonprofit?
CapCon reports details of the performance audit.
State paid health policy nonprofit $108 million before reviewing work plans, audit finds
Rep. criticizes failures in $435 million deal: ‘Major weaknesses exist in the department’s oversight practices’
Scott McClallen | October 1, 2026
Michigan’s Department of Health and Human Services awarded a $21 million contract without getting legally required approval, according to a new state audit.
That is one of several problems discovered by the Michigan Office of the Auditor General in an examination of the state health department’s relationship with a nonprofit that received nine high-level agreements and 857 project agreements totaling $435 million over a two-year period.
The department gave the Michigan Public Health Institute $21 million for services without getting approval from the Department of Technology, Management, and Budget, as required by law.
The auditor flagged these payments as a material condition – the most serious category of concern. The payments were for two out of 20 agreements auditors looked at in a probe of whether the health department took the necessary steps to follow state laws that govern contracts with the nonprofit.
Another objective of the audit was to discover whether the health department properly monitored the grants and contracts it gave to the health institute. Auditors concluded that the state health department must better document and monitor its agreements with the quasi-govermental health institute, which Michigan established by law in 1989.
The state health department paid $108 million, the audit said, for financial status reports before receiving or reviewing quarterly work plans needed to validate the work performed. That was flagged as another material condition.
Nearly 70% of the financial status reports auditors reviewed contained no supporting documents.
Though the health institute and health department are different entities, the two are intertwined. Nearly half of the financial status reports involved in paying the health institute were reviewed by individuals who were current or former employees of the institute, with a total value of $199 million.
A third objective auditors had was to look at how well the department fulfilled its obligation to give lawmakers information on what the research institute did.
Auditors concluded that health department officials routinely failed to report information on salary and wages associated with health institute projects and reports. Some semiannual reports, the auditors said, omitted project and funding information, and none of the projects they reviewed included all the reports, studies, and publications the Legislature requires from the department.
The audit also found that the health department improperly approved certain indirect costs at a higher reimbursement rate than authorized.
House Appropriations Chair Ann Bollin, R-Brighton, said the audit raised red flags.
“For years, I have raised concerns about the scope of the state’s relationship with MPHI and whether sufficient safeguards exist to ensure transparency and accountability,” Bollin said in a statement “This audit confirms that major weaknesses exist in the department’s oversight practices and raises important questions about how taxpayer dollars are being monitored.”
The Michigan Public Health Institute had $200 million in revenue in 2024, according to its 2025 annual report. It has more than 1,000 employees and its work touched each of Michigan’s 83 counties, according to the report.
The state health department budget encompasses about half of the entire state budget. In fiscal year 2027, its budget was more than $30 billion.
The state health department didn’t respond to a request for comment.
MPHI is a nonprofit that partners with health departments, Kelly Kim Coyle, director of corporate communications, told CapCon in an email.
“The Michigan Public Health Institute (MPHI) is a public-private partnership created under bipartisan support to bring efficiency and innovation to Michigan's public health needs. As one of 51 nonprofit public health institutes operating across the United States today, that structure has meant partnering directly with communities and state agencies to responsibly administer public resources for more than three decades.
MPHI remains committed, as we have been since our founding, to the same responsible stewardship of public resources and transparency and accountability standards, as reflected by our longstanding favorable independent audit history. We welcome continuous process improvement for ourselves and the broader public health system in which we work.”
[editor’s note: this story has been updated to include a comment from MPHI]
Doug Ringler is Michigan's Auditor General. The OAG summarizes the history in its MDHHS performance audit - not amenable to copy/paste here, but brief at three pages and well worth the read.
The final OAG report lists MDHHS contracted projects and quantifies the revolving door between MDHHS and MPHI. It also suggests legislative changes to Michigan law.
The problem with Public-private partnerships (PPPs) is that they can lead to high costs for the public sector, excessive risks, lack of transparency, and inadequate consultation with affected communities. Additionally, they may result in questionable diversion of public funds.
A brief snippet from the MPHI website.
https://nnphi.org/members/michigan-public-health-institute/
A just world where tomorrow is healthier for all.
The Michigan Public Health Institute (MPHI) is a nonprofit, bipartisan, public-private partnership dedicated to improving public health for all. MPHI collaborates with government, nonprofits, and other organizations to address public health issues, informed by subject matter experts, research, and data.
Don't let the all-knowing expert façade fool you. These are the bureaucrats, shielded from electorate and marketplace accountability, who rule our healthcare.
Wouldn't you know it - there's a federal parallel. I've highlighted it in bold font below.
‘ANTI-DEMOCRATIC’: Nonprofits That Received Tax Dollars Unite to Oppose Rules Cracking Down on Waste, Fraud, and Abuse
Tyler O’Neil | September 12, 2026
Groups that received federal grants oppose OMB's new grantmaking rules. Pictured: OMB Director Russell Vought, a man with glasses, a bald head, and a white beard sits at a microphone, holding his glasses and looking attentive in a formal setting.
Office of Management and Budget Director Russell Vought on April 16.(Roberto Schmidt/Getty Images)Organizations that received federal funding under President Joe Biden and previously sued President Donald Trump’s administration have now joined a coalition letter opposing the White House’s proposed grantmaking reforms.
The White House Office of Management and Budget proposed the reforms to crack down on the wasteful and ideological spending of taxpayer dollars exposed by the Department of Government Efficiency.
“An honest observer must admit, first, that the massive federal bureaucracy tilts left; second, that these bureaucrats love to send your tax dollars to their friends at left-leaning nonprofits that serve the left-of-center political party,” Scott Walter, president of the Capital Research Center, told the Daily Signal.
“What could be more anti-democratic than insisting that democratically elected officials, managing discretionary grants, may not use their discretion to control grant flows to these colluding groups?” Walter asked.
The OMB Rules
In May, OMB proposed changes to the Uniform Guidance rules governing most federal grantmaking. The proposal would allow agencies to suspend or terminate grants that no longer advance agency priorities or the national interest. OMB cited spending on DEI initiatives, “anti-American ideologies,” and “AI-powered social media censorship tools” as examples of funding warranting greater oversight.DOGE targeted such spending, but courts blocked some grant cancellations under existing Uniform Guidance rules.
Congress passed a government funding bill last week that delays implementation of the rules until Dec. 11.
Criticism
Independent Sector President and CEO Akilah Watkins told the Daily Signal her group signed the letter because the OMB rules “will deeply disrupt the work of charitable organizations and eliminate essential services they provide to Americans in need.”She said the rules will apply a “vague standard,” allowing “political and ideological preferences to corrupt what should be a strictly nonpartisan process.” Independent Sector warned that the rules would weaken Congress by empowering the executive branch, politicizing grantmaking, and allowing for arbitrary termination of long-term grants.
Federal Grantees Opposing the Rule
At least five signatories to the coalition letter either received federal funding, participated in litigation against Trump administration policies, or both.The Department of Health and Human Services awarded the Washington, D.C.-based American Public Health Association $22.3 million for fiscal years 2021-2024.
HHS awarded SAGE, a New York City nonprofit dedicated to helping “LGBTQ elders,” $1.9 million, with $1.2 million coming in 2024.
The National Council of Nonprofits teamed up with the American Public Health Association and SAGE in suing OMB in January 2025, seeking to block an OMB memo directing federal agencies to temporarily pause federal funding for “foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” The law firm Democracy Forward represented the plaintiffs.
“What could make the nonprofits’ partisanship more obvious than the National Council of Nonprofits, when it sued the president, using lawyers from a nonprofit chaired by Democratic ‘super lawyer’ Marc Elias?” the Capital Research Center’s Scott Walter asked.
A federal appeals court concluded the case was moot after the administration rescinded the memorandum.
The American Public Health Association defended its decision to sign the petition, stating that “federal funding strengthens communities, leading to improved health outcomes, lifesaving research for cures, and families that are fed. Politicizing funding will only worsen the health of the nation.”
The Northwest Immigrant Rights Project, a Seattle-based nonprofit that represents immigrants—regardless of legal immigration status—in court, received more than $2.6 million in fiscal years 2021-2024 from the Justice Department, mostly for legal assistance to “immigrant survivors” and trafficking victims.
The project joined the Amica Center for Immigrant Rights in suing the Justice Department for pausing DOJ programs that give illegal aliens information about the laws. The district court upheld the DOJ policy, and the plaintiffs appealed.
The AIDS Vaccine Advocacy Coalition, a New York City-based nonprofit advancing HIV prevention, received more than $16 million for its HIV vaccine and biomedical prevention research project from the U.S. Agency for International Development during fiscal years 2021-2024. AVAC sued the State Department in February 2025, aiming to block an order temporarily freezing international aid spending. A district judge initially ordered the funds restored, but an appeals court reversed. The case remains active.
The Integrated Refugee and Immigrant Service, a Connecticut-based immigration nonprofit that signed the letter, received $30.3 million in federal grants in the years 2022, 2023, and 2024, according to audits obtained via the Federal Audit Clearinghouse. According to the Yale Daily News, IRIS was scheduled to receive $4 million in State Department contracts when Trump issued a stop-work order.
Since these organizations received millions in taxpayer funding, they arguably have an institutional incentive to oppose reforms to the system, even if those reforms are salutary for the nation.
The Daily Signal reached out to the National Council of Nonprofits, SAGE, the Northwest Immigrant Rights Project, AVAC, and IRIS, but did not receive responses by publication time.
‘Common-Sense Accountability’
The dispute reflects a broader debate over who should control discretionary federal spending. Opponents of the OMB proposal warn that allowing executive officials more discretion would introduce politics into grantmaking, but supporters note that federal grants had already systematically supported politically divisive initiatives. While federal grantees should be able to rely on long-term contracts, taxpayers should not be forced to foot the bill for gender ideology or DEI.Rep. Michael Cloud, R-Texas, praised the OMB rules, saying they will return accountability to the federal funding system.
“For years, American taxpayer dollars have funded organizations engaging in unlawful activities and radical ideologies such as promoting gender ideology and racial discrimination, allowing biological men in women’s sports, and facilitating illegal immigration,” Cloud told the Daily Signal. “This is a misuse of taxpayer money, and we must eliminate waste, fraud, and abuse from the grantmaking process.”
“This rule would bring common-sense accountability by aligning taxpayer-funded grants with the law,” he argued. “Americans deserve to know their money isn’t being used to advance a political agenda they never agreed to.”
Maybe an enterprising researcher could find out if these money trails intersect?
A Duck Duck Go AI search states that APHA and MPHI collaborate on various public health issues, including improving health equity. However, no financials are given.
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