This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on September 4, 1998, basing its approval solely on the facts and circumstances stated herein.

May a city fund a nonprofit corporation when the chairman of the board of the nonprofit corporation is also an alderman with the city?

State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, this opinion does not address the Mississippi laws outside the Commission's jurisdiction nor the governmental entity's internal rules and regulations.

The pertinent conflict of interest laws to be considered here are:

Constitutional Section 109 states:

"No public officer or member of the legislature shall be interested, directly or indirectly, in any contract with the state, or any district, county, city, or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term."

Code Section 25-4-101 states:

"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."

Code Section 25-4-103 (f)(i)(ii), (g)(ii), (h), (o) and (p)(i)(ii)(iii) states:

"(f) 'Contract' means:

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(ii) Municipalities.

(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

(o) 'Public funds' means money belonging to the government.

(p) 'Public servant' means:

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government."

Code Section 25-4-105 (2) states:

"(2) No public servant shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member."

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.

I need an opinion as to a $348.00 contribution to a nonprofit corporation is appropriate since the chairman of the Board of the nonprofit corporation is also an alderman on the Town Board.

My Board has already voted to allow this contribution.

The Commission formally adopts Advisory Opinion No. 98-096-E in response to this request and by attachment incorporates it into this opinion.

Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.

Constitutional Section 109 and Code Section 25-4-105 (2), both cited above, prohibit a municipal board member from having an interest, direct or indirect, in a contract authorized by the municipal board that he or she is a member of during his or her term and one year thereafter.

The funding of the nonprofit corporation by the board of aldermen is clearly discretionary.

The funding is, in effect, an implied contract where the city agrees to fund the nonprofit corporation and the nonprofit corporation agrees to use the funds to provide operating funds for programs which operate on a reimbursement basis, and to provide leveraging and matching dollars in various Federal, State, and local programs, which provide benefits to the citizens in their service area.

As the chairman of the nonprofit corporation, the alderman has an interest in its contracts through his fiduciary obligations to the nonprofit corporation.

Therefore, based on the above, the board of aldermen would be prohibited by Constitutional Section 109 and Code Section 25-4-105 (2) from authorizing the above identified funding to the nonprofit corporation during the alderman's term and for one year thereafter.

The requestor is cautioned to advise the alderman that a recusal or an abstention will not prevent a violation of Constitutional Section 109 and Code Section 25-4-105 (2). Even without a board member's vote, the authorization by the member's board nonetheless results in a contract in which the board member has a prohibited interest.

The issue presented by the requestor also must be viewed as it relates to Code Section 25-4-101, set forth above. This code section sets the tone for the conflict of interest laws as the Legislature's "Declaration of Public Policy." This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public's trust in state or local government.

Clearly, a city's funding of a nonprofit corporation that has as its board chairman one of the city's aldermen has the potential of creating suspicion among the public and reflecting unfavorably upon the city. Therefore, the city should not authorize such funding in order to comply with the public policy set forth in Code Section 25-4-101.
 
 
 
 
 
 
 
 

Ronald E. Crowe

Executive Director