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Municipal Law Q&A Test your knowledge of municipal practices and procedures with the questions and answers below. Click here to submit a question to Ancel Glink.
Municipal Q&A - January 2005
May a governmental body give money to a charitable or religious organization?
ANSWER:
Generally, the expenditure of public funds for a non-public or non-governmental purpose is prohibited. If grants are merely gifts they can be recovered in a taxpayer initiated lawsuit. However, where a charitable or religious organization is performing a service the government is otherwise authorized to perform or the government has contracted with the organization to perform such a service, the payment of funds does serve a public purpose and is lawful. It is important to note that the charitable or religious organization cannot provide the public service on a discriminatory basis favoring any religion, race, or ethnicity. It is not uncommon for communities to make token donations to a charitable cause in honor or memory of a public official. Because of the small nature of the expenditure, these payments are not routinely challenged. However, making the practice a regular and substantial part of the government's budget should be discouraged.
There are a number of statutory provisions which codify the general principles in a limited number of circumstances. For example, under Division 11 of the Illinois Municipal Code a municipality is allowed to pay charitable or non-profit organizations to perform services related to the elimination of poverty, operation of youth-oriented service and counseling programs and the provision of special services for seniors. 65 ILCS 5/11-5.2-1, et seq. Although home rule municipalities do not need to find statutory authority for their actions, all governments are subject to the limitation that their expenditures and actions must be directed at some "public purpose."
There are very few judicial interpretations of the general principles, but it is clear that a governmental body may donate funds to a non-profit, charitable or religious organization so long as the services the organization provides may otherwise be performed by the government and directly benefit the community in a non-discriminatory manner. Otherwise, the disbursement may be challenged as an illegal diversion of public funds for a private purpose.
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