An expenditure of public funds must have both a public purpose and specific statutory or charter authority. Although charities and other non-profit entities may benefit their communities, government entities may not donate to them without specific statutory or charter authority. For example, while the Red Cross works to benefit the public, a local unit of government is not specifically authorized to donate funds to it.
Public entities may contract with a non-profit entity for a particular service that the public entity is authorized to provide. To avoid allegations that an impermissible donation has been made, the public entity should enter into a written agreement with the non-profit entity, documenting what the public entity is receiving in exchange for the payment.
For more information on this topic, see our Statement of Position entitled Public Expenditures: Donations and Dues, at:
http://www.auditor.state.mn.us/default.aspx?page=20110607.028.
Date this Avoiding Pitfall was most recently published: 03/31/2017
