Greater accountability for non-profits receiving public funds from Elkin taxpayers are now in effect due to a North Carolina law.
Town of Elkin officials are taking steps to adjust to the new rules.
North Carolina’s Session Law 2012-169/HB 572 effective October 1, 2012 states that a corporation that receives more than $5,000 of public funding within a fiscal year, including the amount of grants or loans and the value of any in-kind donations, from a local government, the state, or the federal government will now provide its latest annual financial statements upon written demand from any member of the public.
Additionally, a corporation that receives public funding shall provide a copy of its most recently completed and filed Internal Revenue Service Form 990 or Form 990-EZ, except of any information not required for public disclosure pursuant to 26 U.S.C. § 6104(d)(3).
A corporation may comply with the provisions of the law by maintaining on its public website a financial report as described in the section and a copy of its most recent Internal Revenue Service Form 990, Form 990-EZ, or Form 990-N submission confirmation or by having such materials posted, as part of a database of similar documents of other tax-exempt organization, on a Web site established and maintained by another entity, provided that the entity does not charge a fee to access the information.
If a municipality appropriates $1,000 or more in any fiscal year to a nonprofit corporation or organization, the municipality may require that the nonprofit corporation or organization have an audit performed for the fiscal year in which the funds are received.
A city or town may contract with and appropriate money to any person, association, or corporation, in order to carry out any public purpose that the city is authorized by law to engage in, but the topic required lawmakers in Elkin to flush out and understand the new rules at the town retreat last Saturday.
“The impact would be the board having more accountability over the public funds it provides to said agencies/groups,” said Elkin town manager Lloyd Payne. “The groups would have to come before the Board, according to the discussion, to not only substantiate the funds they used the previous year but also to state for the record what they want public funds for in the next budget year.”
According to Payne, the examination will allow the town attorney to hear the request along with town officials and the Board of Commissioners and determine if the request or stated use for the funds meets the public purpose laws of the state.
In the past, Payne indicated that a letter has been the only requirement for the groups which have not had a ‘matching’ component to their receipt of public funds.
“I am proposing a process which will be equitable across the board for all groups and will also ensure there is a public forum for these requests to be made and decided upon by the Town Board,” said Payne. “This ensures a greater level of accountability to the public for use of their monies.”
When asked if the steps were also intended to reduce liability that can fall onto the town, Elkin Mayor Lestine Hutchens said the proactive steps are all designed to help protect Elkin.
“For years, we’ve tried to determine how to help local entities,” said Elkin Mayor Lestine Hutchens. “We have to adjust to make sure that we’re still able to help, but we must make sure that the entity has used prior funds as indicated before we consider any requests for new funds.”
Hutchens stated that the design of the state bill is intended to weed out improprieties that could possibly happen in much larger municipalities, but rarely hits funds in Elkin.
“I can name off the top of my head who we funded locally,” she said. “We’re a small town. We know exactly where the money goes and the great things it does, but the bottom line is if you don’t have transparency, you don’t get funds.”
The following entities were funded over $5,000 by Elkin in 2012, fall under the new state law, and must take steps to have all expenditures transparent.
Surry EDP - $15,000
Elkin Rescue Squad - $10,000
Foothills Arts Council - $10,000
Reeves Theater - $15,000
Elkin Valley Trails Association - $10,000
Yadkin Valley Craft Guild - $10,000
Northwestern Regional Library - $85,868
Reach Anthony Gonzalez by calling 336-835-1513 or email at agonzalez@civitasmedia.com.
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