5.3. SR 02-18-1997 - Laserfiche WebLink

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A PUBLICATION FOR LOCAL GOVERNMENTS Fall 1993 Volume 2 Number 3 "INSiDF .: .', ..... .: .'..::.(:' ~ ...' Ne; b;a'rd Promotes ::.--:'.': :!:i ;,.:'::..:-:: ) -..-' ,- innovation in government page'271 ', .' DO yOur gifts have a:it~,..' '.' '"'- : ' - public purpose? _ .- '.'-page 4 Local units of government are often ap- proached for contributions to various worth- while events and causes. A governing board must evaluate these requests in light of the State constitutional requirement that all ex- penditures of public money be for a public purpose. The analysis of public purpose for gifts to an ihdividual or organization must involve a determination of whether the primary object is to promote a private end. If the primary object is to benefit a private objective, the expendi- ture cannot meet the test even if there is inci- dental public benefit. Conversely, if the pri- mary objective is to meet a public purpose, an incidental benefit to private individuals does not disqualify the expenditure. Therefore, a direct contribution to an in- dividual citizen or organization for sponsor- ship or support of an undertaking that prima- rily benefits the individual or organization cannot be supported on the theory that the )ublic benefits when individuals gainfully pursue enterprises. The general public must benefit. While public purpose should be con- Gifts versus promotional costs strued in light of modern life the test cannot be met by theoretical assessments of what might be good for the public. It should be reasonably likely that a direct benefit to the public will occur. Consequently. a local unit of government cannot donate funds to improve a church pro- ~am, nor may they donate funds to the Cham- ber of Commerce, Boy Scouts, Red Cross, Rotary, Kiwanis and other kindred groups. See Op. Atty. Gen. September 28, 1933; Op. Atty. Gen. 59-A-3, July 10, 1946. The Minnesota standard is stated in Burns v. Essling, 156 Minn 171 (1923). The court on page 174 says, "The wisdom or expediency of a proposed expenditure of taxpayers' money ...is to be determined solely by the legislature or by local authorities to whom legislative powers have been delegated. It is well settled that. if the primary object of an expenditure of municipal funds is to subserve a public pur- pose. the expenditure is legal. It is equally well settled that, if the primary, object is to promote some private end. the expenditure is illegal." The Attorney General has determined that general powers to expend funds by either a charter city or a statutory city are not suffi- cient to allow gifts which do not meet the above standard. See Op. Atty. Gen. September 28, 1933; Op. Atty. Gen. 59-A-3, July 10, 1946. The guidance above would be sufficient if not for the promotional activities pefforn~ed by many of the above referenced organizations. While a general gift to the Rotary is without authority, a contribution by a city to help spon- sor an annual marathon or festival to promote a city may qualify. In light of the gray area between promo- tional expenditures and gifts, it is our advice that a local unit of government develop a policy or procedure to ensure that all expenditures of this nature are evaluated prior to commitment of funds. In the case of charter cities, the charter should be evaluated to determine whether spe- cific reference is present to provide authority for gifts which do not meet the general stan- dard. If the charter is silent, the general stan- dard should be followed.