With inquiry of former CEO, Minneapolis chamber of commerce looks to merge with St. Paul counterpart

The St. Paul and Minneapolis area chambers of commerce have discussed merging before, but never as seriously as now.

The discussions come after a grim year for the Minneapolis Regional chamber. Its CEO abruptly departed after an internal investigation discovered the apparent disappearance of about $290,000. An ensuing budget shortfall led to layoffs.

Those woes are a catalyst to merger talks, though not the only one. The two chambers of commerce — like their counterparts nationwide — are coping with stagnant membership, financial pressures and questions about their relevancy.

“This is a pivotal moment,” said B Kyle, CEO of the St. Paul Area Chamber and a board member of the national Association of Chamber of Commerce Executives.

“Chambers nationally are a mature sector, and the trajectory forward is flat,” Kyle said. “There is a necessity to assure that we are relevant and impactful going forward.”

Combining the St. Paul and Minneapolis chambers could save money and provide a unified business voice for the Twin Cities, which some say has long been lacking.

Conversely, the concerns of one city could get eclipsed by the other if a merger soured.

The heads of both chambers said some of their members are quite interested in a merger — and some are skeptical.

“We have gotten some pushback,” said Mike Logan, interim CEO of the Minneapolis Regional Chamber.

Logan and Kyle said both chambers are investigating the potential benefits and pitfalls of a merger, or as they call it, a “joint venture.” Earlier this year, they established a 22-member committee — hailing from businesses of all scopes and sizes — to produce a recommendation by December.

Kyle and Logan said the outcome could be a full joint venture; the current status quo; or something in the middle, like pooling backroom operations.

“We are going through a very deliberative process,” Logan said. “There is no foregone conclusion.”

Jonathan Weinhagen had been the Minneapolis chamber’s CEO since 2016 before departing June 27.

Six weeks later, the chamber disclosed that he left after an internal investigation of “financial and government controls.” At the same time, the chamber laid off five staffers due to a $500,000 projected deficit.

The investigation uncovered a $152,364 “material diversion of assets” between 2020 and 2022, involving “cash payments made for unsubstantiated purposes,” according to the chamber’s 2023 annual report to the IRS, filed in November. The payments went to an “unknown vendor,” or were used for travel.

The Minneapolis Regional Chamber Development Foundation, a chamber affiliate, also reported a “diversion” of assets — about $137,500 — in its 2023 IRS report. The suspect transactions occured between 2019 and 2022 and involved an “unknown vendor” and “unknown credit card.”

Law enforcement is investigating the matter, said a source familiar with the matter who declined to be named because they weren’t authorized to speak.

IRS reports show that in 2023, the Minneapolis chamber suffered its worst loss in at least a dozen years — about $297,000. Logan said the chamber was back in the black by just over $40,000 in 2024 due to the staffing cuts.

But the Minneapolis chamber foundation, which lost $640,000 in 2023, was in the red again in 2024 and has had negative assets for the past two years.

“The material diversion of assets certainly had an impact on our financial position,” Logan said. “I can’t speak for previous management, but there were choices made beyond the material diversion that led to where the chamber is today.”

Logan, a communications consultant who has served on the boards of the Minneapolis, St. Paul and Minnesota chambers of commerce, became Minneapolis’s interim CEO in October.

John Stanoch, a business leader and onetime Hennepin County judge, had stepped in as interim CEO immediately after Weinhagen left.

“Part of what John Stanoch had to do was triage,” Logan said. “He was a stabilizing force.”

Last summer’s episode was a “catalyst” to merger talks with the St. Paul chamber, Logan said. But the ”idea of a merger has been on the table for decades.”

Some sort of joint venture could improve the performance and bolster the impact of both chambers, Logan and Kyle said.

Chambers of commerce nationwide are under pressure. One of their core functions — putting on networking events for businesses — has suffered from COVID-19 and the surge of online business networking.

The St. Paul chamber has managed to mostly prosper, other than posting a $232,363 loss in 2023, its only loss in at least a dozen years, IRS filings show. The chamber rebounded to a $55,000 gain last year, Kyle said.

Its membership has grown from 1,250 in 2020 to 1,800 last year, according to annual rankings of chambers of commerce by The Minneapolis/St. Paul Business Journal.

The increase stems from doing backroom operations work — like payroll and benefits processing — for the plethora of smaller chambers of commerce in the Twin Cities. The St. Paul chamber counts members of those organizations as its members.

“We are growing because we serve others, not because we have organic growth,” Kyle said.

Those innovative contracting services have been a big success, providing about 45% of the St. Paul chamber’s total revenue last year, Kyle said.

Both the St. Paul and Minneapolis chambers date back to the 1800s and for many decades stuck to issues in their respective cities. But in more recent times, both have merged with smaller local chambers of commerce.

The Minneapolis chamber represents Bloomington, Golden Valley, St. Louis Park and New Hope, and has members in 11 other Hennepin County suburbs. The St. Paul chamber represents 12 cities in Ramsey County, and has many members in Dakota and Washington counties.

Several large Twin Cities companies are members of both chambers, and, for some, one combined chamber would be preferable.

The idea of merging the two chambers has always come with a catch: Each city’s individual needs and voice could be lost in the mix, particularly St. Paul’s. But the St. Paul chamber now appears to be the stronger of the two.

“I think part of the timing now is the financial position the Minneapolis chamber is in,” said Adam Duininck, CEO of the Minneapolis Downtown Council, a business group promoting the city’s core.

A merger could help the two cities speak together for the benefit of both, he said.

“There isn’t a consistent Minneapolis-St. Paul narrative,” he said. “If we can be more effective and efficient together, [a merger] is a good idea to explore.

R.T. Rybak, a former Minneapolis mayor and current CEO of the Minneapolis Foundation, has long supported merging the two chambers.

“This region is not Noah’s Ark,” Rybak said. “It doesn’t need two of everything. Our inability to get the two cities to work together has been damaging.”

Rybak is a board member of Greater MSP, an economic development group for the Minneapolis-St. Paul region.

But he said Greater MSP focuses on “macro regional issues.” A combination of the Minneapolis and St. Paul chambers would address the “unique” and similar challenges that small businesses face in both cities.

Rybak acknowledged a merger may be harder to sell in St. Paul.

“Minneapolis is larger. There is a sense of getting gobbled up,” he said. “I understand why it would be more complicated there.”

John Regal, a Stillwater insurance industry executive, said the St. Paul chamber was “approached no less than three times to consider a merger” during his 20-year affiliation with the group.

“The question we always asked was, what is the benefit for St. Paul businesses? And each time the answer was there was no benefit.”

Regal said St. Paul — particularly its downtown — is currently facing several big economic issues at once, including a real estate crash fueled by the collapse of downtown’s largest property owner, Madison Equities.

“St. Paul has to fix what it’s in its own back yard before expanding outward,” said Regal, who was a St. Paul chamber director and board chair during the 2010s.

He said that Kyle, “to her credit,” has solicited opinions from past St. Paul chamber board chairs and that Logan has “stepped in admirably” to lead the Minneapolis chamber.

But he said a merger now “is a straight-out rescue” of the Minneapolis chamber.

Logan emphatically said that’s not the case.

“If we don’t merge, we have a plan to address our debt and address the structural issues of the past.”

The debt — owed to vendors — covers expenses for software platforms and the chamber’s internal financial investigation conducted by prominent law firm Jones Day.

Kyle said it’s critical “that Minneapolis solve its own financial obligations” before any merger. “If we move forward, we can’t be adding risk to St. Paul.”