Nebraska auditor questions job creation, spending by Nebraska Startup Academy

OMAHA, Neb. (KMTV) — A Nebraska nonprofit created to help startups and spur job growth in Omaha is facing scrutiny after State Auditor Mike Foley raised concerns about its use of public funding and the number of jobs it has created.

The Nebraska Startup Academy was formed in 2022 with a mission of helping fledgling businesses succeed. The organization received funding through the North and South Omaha Recovery Grant Program, which was created following the COVID-19 pandemic to support economic recovery in those communities.

But in a new report, Foley sharply criticized the nonprofit's progress, describing its job creation as "pathetic."

Foley said his office questioned claims about the number of jobs generated through the program. According to Foley, the organization initially reported dozens of new jobs, but that figure was revised as auditors examined the underlying information.

"That's our suspicion that there was a misrepresentation of their progress, claiming dozens of new jobs," Foley said. "When we started peeling back the onion and looking at the data, we said, no, you didn't create all those new jobs. And so they revised it and then revised it again, and now we're down to about 3 jobs."

Foley's review also raised concerns about how the nonprofit used its funding. According to the auditor, more than $1 million went toward salaries.

The report also questioned the relationship between people involved with the Nebraska Startup Academy and Move Venture Capital. Foley said individuals behind the academy have an economic interest in the company, a relationship he said was not disclosed on a tax return where it should have been reported. Foley characterized the arrangement as a conflict of interest.

Members of the Nebraska Startup Academy board pushed back on the implications of the review.

In a statement, the organization said Foley's report "does not establish intentional misuse of public funds or fraudulent conduct."

The academy also defended its record, saying its work during the past three years "has built a statewide platform serving more than 750 entrepreneurs, including more than 80 from North and South Omaha ZIP codes."

The organization noted that Foley's letter is based on a preliminary review of state documents and that the auditor concluded no further audit was necessary.

Foley said the questions surrounding the organization come as Nebraska faces significant budget pressures, which could put programs receiving state funding under greater scrutiny.

"The other dimension on this thing, of course, the state's got it facing a billion dollar budget shortfall," Foley said. "So everything you can look at is going to get cut. And this might be on the chopping block."

The disagreement leaves lawmakers and taxpayers with competing pictures of the academy's impact: Foley is questioning the amount of documented job creation compared with the public money spent, while the Nebraska Startup Academy points to the hundreds of entrepreneurs it says its programs have served.

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