No You Can't

Last November, after having cut it from the budget, the Loudon County Board of Education voted to donate $16,000.00 to the Loudon County Education Foundation. The foundation purports to benefit both Lenoir City and Loudon County school systems with various assistance programs.

At the time, myself and some other board members questioned the legality of such a donation. We were told by the director of schools, Wayne Honeycutt that he had consulted with board attorney, Chuck Cagle, and was told that the donation was legal.

Board member Lisa Russell requested an Attorney General's opinion on the matter through state representative Jimmy Matlock. The opinion was released last week and as no surprise to some the opinion states that a board of education has no authority to make donations to non-profits. 

S T A T E O F T E N N E S S E E
OFFICE OF THE
ATTORNEY GENERAL
PO BOX 20207
NASHVILLE, TENNESSEE 37202
April 2, 2009
Opinion No. 09-46

County Board of Education donations to 501(c)(3) non-profit organization

QUESTION
Are monetary donations allowed to be made from a school board’s general fund budget to 501(c)(3) non-profit organization?

OPINION
No.

ANALYSIS
A 501(c)(3) non-profit organization is exempt from federal income taxation pursuant to the Internal Revenue Code. See 26 U.S.C.A. § 501(c)(3). These organizations are defined as follows:

Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office. 26 U.S.C.A. § 501(c)(3).

Tennessee Code Annotated § 49-2-203 defines the powers and duties of local school boards. Local school boards do not have the power to donate from their general fund budget to a 501(c)(3) non-profit organization pursuant to a local school board’s enumerated powers.

To contrast, the Tennessee legislature has expressly provided authority to county and municipal legislative bodies to make charitable contributions under certain conditions. See generally Tenn. Code Ann §§ 5-9-109 and 6-54-111. If the Tennessee legislature had intended to provide authority to local school boards to make charitable contributions, it would have expressly provided such authority.
 

ROBERT E. COOPER, JR.
Attorney General and Reporter

MICHAEL E. MOORE
Solicitor General

MELISSA MOREAU
Assistant Attorney General

Requested by:
The Honorable Jimmy Matlock
State Representative
219 War Memorial Building
Nashville, TN 37243-0121

Now the question, what about the $16,000.00? Should the Foundation return the money? If they have it they should. The education is a worthy organization, however the board can not donate money to any organization.

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4/7/09