Charity or Reparations? Native American Farmers Say Nonprofits Not Right Place for Unspent Settlement Money

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February 4, 2016; Washington Post

Following the federal government’s commitment to pay millions of dollars to resolve a class-action lawsuit filed by thousands of Native American farmers and ranchers, representatives of the claimants have now asked a judge to fix the “monumental” failure that has left more than half the total settlement—over $380 million—unclaimed.

The class action suit, one of the largest of its kind, was filed in 1999 and alleged that the U.S. Department of Agriculture discriminated against Native American farmers who sought loans from the department. USDA paid $680 million, and then another $80 million in debt relief, to settle Keepseagle v. Vilsack in 2010. The settlement included the establishment of a claims process for Native Americans who alleged discrimination and a provision that any leftover money would be distributed to nonprofit groups that advocate for Native American farmers and ranchers.

At the time, representatives believed that more than 10,000 claimants would come forward and that only $1 million would remain after the distributions to farmers and ranchers. The estimated $1 million left over was to go to nonprofit groups, but as of now, only roughly 3,600 successful claims have been filed and only around $180 million plus $60 million in tax payments have been paid through the fund, along with approximately $60 million for the inevitable attorney fees. This leaves more than half of the original fund unclaimed, and some ranchers are not happy with the possibility of much of that going into nonprofit hands.

The current proposal would have $77 million more going to the ranchers who have already received a settlement, another $38 million going to various charities, and the rest going to a yet-to-be-formed philanthropic trust.

According to USA Today:

After negotiations, the government agreed to allow the remaining money to be put into a trust. If approved, 10 percent would be distributed to nonprofits by an advisory board, and the remaining 90 percent would be distributed over the next 20 years by a foundation to nonprofits that help Indian ranchers and farmers.

But this proposal is deeply unpopular with ranchers, who argue that the charitable organizations were not direct victims of discrimination, unlike the individual ranchers and farmers in question, and that the money should be given directly to ranchers.

Marilyn Keepseagle, one of the original class litigants, has proposed that the money either be paid out to those who have already successfully received $50,000 settlements or that the process be reopened to receive claims from Native Americans who did not apply the first time.

“The ends of justice demand that this money should be distributed to the class members instead of providing a historic and unwarranted payout for charitable organizations,” Keepseagle said in her motion.

Marshall Matz, a lawyer representing Keepseagle and other Native Americans who want the money given directly to the ranchers, adds that a charity as intermediary is unnecessary. “I don’t know why you would need a foundation—to create a foundation—to do unspecified good things when you can give the money to the people who can prove they were damaged,” Matz said.

The original settlement cannot be changed after April 28th of this year without agreement on what to do with the leftover funds, and U.S. District Judge Emmet G. Sullivan called for new talks between the original litigants and the USDA, arguing that leaving such a large sum unclaimed could be viewed as “unjust and insufficient.”—Sophie Lewis