Q: We had a long-time board member pass away and the family requested that donations be made to a scholarship fund in lieu of flowers. Is there any reason why we could not make a token donation – say $50 – to that fund? One of our board members questioned the legitimacy of using public funds in such a manner.
A: Many organizations do dip into their funds to make donations in similar situations. Some deal with this question in their bylaws, some include a line item in their budget for such tributes and others just do it when the situation arises. Still, the answer to your question is actually fraught with complex issues to consider.
Obviously, the cleanest way to handle this would be for each board member to chip in personally to pay tribute to their recently deceased colleague. However, that opens its own can of worms. What if someone doesn’t want to contribute – perhaps he or she is new to the board and did not know the person well? Do you ( can you) still say the gift is from “the board?” Or, what if the individual contributions come in at a variety of levels? Will those giving more be satisfied with having their money co-mingled? If, instead, you have the contributions sent separately, has the organization really recognized the dedication of the person who just passed? What happens the next time there is a death – or a birth, illness or marriage? What will be the response? At what point do you reach “donor” fatigue? And, where is the equity if board members tire of giving at the same time that one of the biggest contributors to these tributes in the past faces a life cycle event?
Best would be if the board agreed that one of the expectations of all board members will be that they would give a specified lump-sum amount to a tribute fund each year to cover such contingencies. That amount might range from $15 – $100 per person, depending on the size of the board, the anticipated demand for such a fund and the tribute gift level deemed appropriate. But, the organization then has to consider whether that expectation will negatively affect giving to the organization itself.
But you asked whether public funds could be used to make this tribute. We all know that board members cannot “benefit” from their position. In realistic terms, I doubt the IRS or the general public would consider an occasional tribute gift made in memory of a long-serving board member to be an abuse of the system worth pursuing. This is especially true since such tributes tend to be a card, flowers or a platter of food costing a relatively insubstantial amount of money. Of course, if you expect to acknowledge all life cycle events of not only your long-standing board members but all board members, staff, past presidents and so on, you may end up spending a substantial amount of money on these tributes, which is harder to justify. And, as I questioned above, where do you stop? There is still the ethics of spending money for purposes beyond the realm of donor intent. Also, in this instance, you wanted to make a donation to an outside scholarship fund. What do your bylaws say about making donations to other organizations?
You might want to consider setting up an internal tribute program where people can be recognized in some manner, but any monies spent will stay within the organization. Just because someone has a “preferred” charity doesn’t mean that tribute cannot be paid in a different manner. Presumably, since these people have been involved with your organization, it holds (or did hold) some place in their heart.