An effort by St. Paul neighborhood groups to raise money for the Midway area after riots destroyed businesses along University Avenue has fallen apart after accusations that white people have been capitalizing on the death of George Floyd.

Stalled in the dispute is more than $800,000 in donations that poured into the Neighbors United Funding Collaborative (NUFC) as first the COVID-19 pandemic and then property destruction set off by Floyd’s death created dire need.

“It has been a long slog,” said Kate Mudge, executive director of the Hamline Midway Coalition.

Infighting about the racial makeup of the groups and their priorities boiled over in a Zoom meeting in June that was followed by the resignations of many white volunteers. Driving them out was Isabel Chanslor, a Latina member of the group, who said the Hamline Midway Coalition and others suddenly cared about racial justice work only when donor dollars started coming in.

“This is a white-led organization and my belief is that racial justice money should be going to Black organizations,” she said. “I felt strongly that these people were co-opting the movement.”

Chanslor said she now plans to make the NUFC a 501(c)(3) capable of fundraising and making grants, in effect cutting the neighborhood groups out. The money already raised remains under the control of the Hamline Midway Coalition and the United Park District Council, but Chanslor said she’s secured pledges of an additional $750,000 from four foundations.

Not all of the money has been tied up in disputes. About $170,000 in COVID relief grants has been sent out to 68 local businesses at $2,500 apiece. But even as Mudge and others say they want to see rapid distribution of the thousands of donations, it’s unlikely that the money will go anywhere soon.

The Neighbors United Fund Collaborative was created by the city of St. Paul and the Minnesota United professional soccer team as a community benefit fund, a perk of the new stadium coming to town, but it didn’t formally begin operations until this year. After years of preparing a mission for the group, a group of 11 volunteers known as the NUFC advisory committee met in January with modest ambitions to help local businesses.

Their plan was to send grant recommendations to the two neighborhood organizations responsible for fundraising and distributions, the Hamline Midway Coalition and the Union Park District Council.

The group had only begun fundraising in earnest when COVID-19 hit, and it soon found itself with a $75,000 gift earmarked for pandemic relief from Allianz Life and the Minnesota United. Some 30 businesses got a $2,500 check, Mudge said. A second round of grants sent out $95,000 to 38 businesses.

“And then May 25 happened,” she said, referring to Floyd’s death. In the days after Floyd died, protests turned ugly along University Avenue. Store windows were smashed, buildings burned, and looters carried off merchandise from longtime neighborhood businesses. A 100-year-old pharmacy, Lloyd’s, was burned to the ground, and numerous other businesses were ruined.

Mudge said people were handing donations to the Hamline Midway Coalition and asking how else they could help, so the advisory committee created a specific campaign, the Midway United Fund, to raise money for the rebuilding of the area. “It was very clear that people who were donating were donating for rebuilding efforts,” she said.

The neighborhood groups don’t hold the donations themselves, but pass the money along to the St. Paul Foundation. The most recent report says the neighborhood groups have raised $1.05 million so far this year, Mudge said.

Chanslor said she went to the first advisory committee meeting and immediately noticed the group’s racial makeup. “Their intention had always been to be reflective of the community and that wasn’t happening,” she said.

Chanslor, who ran a nonprofit in the Hamline-Midway area, also disagreed with the fund’s initial goals, which she said centered on surface improvements and beautification projects. She said she suggested that the group talk about longstanding community problems in the Midway area such as gentrification, and racial and social justice, but she was shot down.

“The response was, ‘We have kind of been there and done that and it’s divisive. And we don’t want to offend our funders,’ ” she said.

The group tried to create a more diverse group when it first formed the advisory committee, Mudge said. They eventually created a group of 11 people, most of them white.

“Could it have been better? Absolutely. And was there any opposition to create a more diverse committee? None at all,” Mudge said.

Chanslor said she was especially taken aback by the Neighborhood United Fund Collaborative’s pivot to racial justice after rejecting her earlier calls for such work

“Especially when this group told me and others, officially, that they’re not about racial justice. They didn’t want to use those terms,” she said. “It was insensitive and wrong for any white-led organization to be accepting racial justice money.”

The Hamline Midway Coalition has since taken down its GiveMN page and stopped accepting donations. The St. Paul Foundation is holding the money raised so far, and Mudge hopes to see those funds distributed.

“We are standing by what was on the website. The intent of the donors is really important to us,” she said.