See You In Court - January 2025

Bob Bombast, veteran member of the Nutmeg Board of Education, has been frustrated by the perennial need to reduce the Board’s budget request before submitting it to the Nutmeg Board of Finance and its parsimonious Chair, Seymour Dollars.  Bob was delighted, therefore, to reconnect with his high school friend, Big Bucks, who has recently moved back to Nutmeg after making his fortune in tech.  Bob saw an opportunity to supplement the Board budget by talking Big into making a large donation to the Nutmeg Public Schools.

Bob met Big for coffee to make his pitch.  Bob started by reminiscing with Big about their days at Nutmeg Memorial High School.  Neither was much of an athlete, but they became fast friends as members of the Computer Nerds Club.  Bob gently approached the possibility of a donation.  “Who knew where your interest in computers would take you?  You have done very well for yourself.  How well have you done, if you don’t mind my asking?”

“I am very fortunate,” Big told Bob.  “I was at the right place at the right time, and I will never have to worry about money again.” 

Bob did not let Big’s vague response deter him.  “I should have stuck with computers myself,” Bob responded.  “At least I have had the pleasure of serving our community as a member of the Nutmeg Board of Education.  But there is just one problem -- the needs of our school district are far greater than the community is willing to fund.”

Big took the bait.  “Do you think that I could help?  My son is just entering the middle school, and I want him and his classmates to have a good experience.”

Bob was quick to respond.  “The middle school years are critically important.  Middle school is a great time for students to explore different paths without getting grades that will be included on the transcripts that they will be submitting to college.  We have been trying to provide a state-of-the art computer to each of our middle school students, but each year we end up having to cut the money for these new computers from our budget request.”

Big perked up.  “Maybe I can help!  I would be happy to donate the amount that the Nutmeg Public Schools needs to buy premium computers for all students attending Median Middle School.  Will $100,000 do it?  I have just two conditions for making this donation,”

“Whatever you want!” Bob shot back.  “We can make this happen.”

“Great!” responded Big.  “I will write the check right now if you can assure me that (1) my donation will be tax deductible, and (2) my identity will be confidential.  As you can imagine, people are hitting me up all the time looking for money for this or that.  I don’t want anyone to know that I have paid for these new computers.”

“Consider it done!” Bob assured Big.  Big then promptly wrote out the check and handed it over to Bob after signing it with a flourish.

Bob promptly dropped the check off at the Board Offices, and Bob made the big announcement at the next meeting of the Nutmeg Board of Education.  “An anonymous donor has made a substantial donation to the Nutmeg Public Schools, and I am pleased to announce that all middle school students will be getting fancy new computers next year.”

Local reporter Nancy Newshound was intrigued by Bob’s announcement.  The next day, Nancy sent Mr. Superintendent an email with a FOIA request for “any and all records revealing the identity of the anonymous donor mentioned at the Board meeting last night.”

Can the Board keep Big Bucks’ identity a secret?

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The donation Big Bucks made to the Nutmeg Public Schools raises a number of legal issues, and whether Big can remain anonymous is one of them.  Under the Freedom of Information Act, the definition of “public records” includes information recorded in any manner that relates to the business of the public agency.  If the district kept a copy of the check from Big (or if its bank statement later includes an image of the check), those records would be subject to disclosure in response to Nancy’s request.  If a donor truly wants to remain anonymous, the actual donation must be made by a third party on behalf of the donor, for example, by legal counsel for the donor.

Reviewing this matter more generally, we first note that Conn. Gen. Stat. § 10-237(c) provides that boards of education “may receive and accept any donation or gift of personal property to be used for the educational benefit of students,” and “personal property” includes cash.  Moreover, the statute permits boards of education to accept and use (or expend) the gift without municipal approval.  However, given the concerns described below, boards of education are well-advised to adopt policies concerning the acceptance of gifts.  Typically, such policies exclude gifts of minimal value below a specific threshold, but otherwise they require review and action before a gift is accepted.

There are, of course, practical concerns over gifts.  Will accepting the gift result in future maintenance expenses?  Would accepting the donation implicate the interests of the municipality because it would affect the real property owned by the municipality? 

There are also legal concerns in considering whether to accept a gift of personal property.  Conn. Gen. Stat. § 10-220(a), “Duties of boards of education,” provides:

Each local or regional board of education shall . . . shall give all the children of the school district . . .  as nearly equal advantages as may be practicable; shall provide an appropriate learning environment for all its students which includes . . . equitable allocation of resources among its schools . . . .

Accepting a significant gift that will benefit the students in one school in a district could trigger review of that action under this provision requiring an “equitable allocation of resources.”

Accepting donations can also raise issues under Title IX.  That law requires that students have equal opportunities irrespective of gender, and opportunities can be measured by the amount of expenditures.  If the football boosters make a significant donation to the district’s athletic program to replace equipment or to purchase blocking sleds, for example, the value of the donation will be ascribed to the school district as an expenditure for boys sports, which could cause a disparity between measured support for boys sports and for girls sports.

Finally, there can be tax consequences of such donations.  The Internal Revenue Code, 26 U.S.C. § 170, provides that a charitable contribution to a governmental entity is tax deductible, but “only if the contribution or gift is made for exclusively public purposes.”  Accordingly, a contribution that directly benefits the donor would not be deductible.  Here, it seems unlikely that the mere fact that Big’s child attends Median Middle School would disqualify the charitable contribution as tax deductible.  However, uncertainty on this point underscores an important aspect of accepting charitable gifts to school districts.  Bob should not have been so quick to assure Big that his gift would be tax deductible.  Rather, in accepting gifts, school officials must be clear to the donor that tax implications of the gift are for the donor alone to figure out.