Question: A Club (that is a service club) would like to raise money to send to a non-profit organization such as "Doctor’s Without Borders or World Visions". Can this money be deposited into the club account in ASB and then can a check be written to that non-profit?

Answer: The issue that you are asking about comes up a lot as students want to "do the right thing" and fund-raise to help others less fortunate. And none of us want to stop them from doing so. But, because of our connection to public entities we do have to worry about the "gift of public funds" issue.

In actuality, the only place in law that mentions "Gift of Public Funds" is the California Constitution. Article 16, Section 6, of the California Constitution provides that the State Legislature cannot authorize any county or other political subdivision to make a gift of public funds. Section 6 exempts certain types of expenditures from the prohibition, two of which may apply to school districts. First, Section 6 does not prohibit a school district from joining with other public agencies to enter a joint exercise of powers agreement, joining a publicly owned non-profit corporation, or joining another public agency as authorized by the Legislature in order to provide for payment of workers’ compensation, unemployment compensation, tort liability, or public liability losses. Second, Section 6 allows a school district to provide aid to private persons for the purpose of clearing debris during a period of disaster, if found to be in the public interest and if the aid is eligible for reimbursement.

Since donations to other organizations do not fit within the above two exemptions, the general consensus would be that there could be a "gift of public funds" issue. That’s why FCMAT suggests that fund-raisers could occur if the district/students join with another organization and the checks be written to that other organization, still allowing the students to participate in the fund-raising, keeping the money out of the ASB bank account. Or, if that is not possible or reasonable, we suggest that the governing board make a determination as to whether this expenditure is in the public interest and if they want to go ahead with the fund-raiser/donation. If they do, they could possibly approve a resolution to set up a special trust account with ASB for the fund-raiser and all applicable funds be deposited there. Once the fund-raiser is over, the check could be written to the organization and the trust account closed. If the Board has determined that a particular type of expenditure serves a public purpose, courts have almost always deferred to that finding, based on past practice. So by the board specifying a resolution and specific trust account for the purpose of raising funds, there may not be an issue.

9/3/08