February 6, 2011 | Read Time: 2 minutes
Virginia’s Constitution prohibits state funds from going directly to nonprofit organizations that are not operating under state contracts, according to a new legal opinion issued by Virginia’s attorney general.
Virginia’s governors and legislators have routinely skirted the prohibition in recent decades by classifying charities as “historical” or “cultural.”
In amendments to the state’s budget for the 2011-12 biennium, Gov. Robert F. McDonnell proposed grants to nonprofits, including $500,000 for Operation Smile, a Norfolk charity that provides free surgeries to repair facial deformities; and $500,000 for the Federation of Virginia Food Banks.
But Attorney General Ken Cuccinelli II wrote that the Constitution does not permit such spending.
The opinion isn’t likely to affect charities in other states—although given most states’ budget deficits, it is always possible that politicians elsewhere will dig through their own laws to find a clause like the one in Virginia. Officials at the National Council of Nonprofits, an association of state organizations, said they did not know how many other states, if any, had similar statutes.
‘Opening the Floodgates’
In his ruling, Mr. Cuccinelli noted that a panel charged with revising the Virginia Constitution in the late 1960s acknowledged that some charities play an important role in providing services that would otherwise have to be offered by the state.
Ultimately, however, the commission left the ban in place, fearing that “opening the floodgates” to such spending would lead to requests from a “vast number of private groups.”
“The question is not whether these proposed amendments serve noble purposes and that they would provide needed relief—unquestionably, they are and they would,” Mr. Cuccinelli wrote. “The question is one of fidelity to the text of our Constitution.” He noted that the Constitution does allow some payments to nonprofits, such as when state agencies pay charities for good or services.
Grants, Not Earmarks
Governor McDonnell’s administration is reviewing the decision and its consequences, according to his spokesman.
Special Olympics Virginia, a charity in Richmond, has received state appropriations five times since 1999, and Governor McDonnell proposed $200,000 for the charity in an amendment to the 2011-12 budget
The previous grants to Special Olympics Virginia went toward general operating expenses.
Roy Zeidman, a senior vice president at the charity, said that Special Olympics had been lobbying for state support, but it didn’t expect to receive anything, given Virginia’s budget woes. Still, he would like to see the General Assembly come up with a long-term fix.
“I would hope that they would come to some understanding about how to fund organizations like ours that provide valuable services to the citizens of the commonwealth,” he said.
But Michael L. Wyland, a fund-raising consultant in Sioux Falls, S.D., said most charities should seek grants or contracts for providing services, rather than pursuing earmarks from legislators. “When you hitch your fund-raising wagon to that kind of star, you’re potentially only one election away from being out of favor,” he said.
