Virginia AG says state funds to nonprofits are unconstitutional

The Virginia General Assembly and Virginia nonprofits are both scrambling to make heads or tails of a recent statement. Virginia's Attorney General Ken Cuccinelli issued a legal opinion on January 28th regarding the states's ability to spend funds on services carried out by nonprofit organizations.

The opinion was sought by Delegate John O'Bannon, when he called inclusion of grants to nonprofits to the latest budget into question. This year, Governor McDonnell included $500,000 for Operation Smile and an additional $500,000 to the Federation of Virginia Food Banks. However the issue becomes quite a confusing one considering the state has made appropriations to nonprofit organizations in past budgets, with examples provided by Cuccinelli dating back to 1999.

According to The Washington Post, more than $23 million in grants to nonprofits were proposed for inclusion in the two-year budget. The Virginia constitution states that the General Assembly is prohibited from making "any appropriation of public funds, personal property, or real estate...to any charitable institution which is not owned or controlled by the Commonwealth". However exceptions can be made for appropriations, specifically for the reform of youthful criminals and to allow counties, cities and towns to make appropriations to nonprofits as they see fit.

Further making the argument unclear is the terminology utilized. It is unclear from the opinion and other information as to if there is a clear difference between appropriations, grants and contracts. Article IV, Section 16 of the Virginia Constitution only refers to appropriations, not contracts. Is it possible that individual departments could contract with nonprofit groups seeking funds for services rather than wait on the decision regarding appropriations?

Speculation has risen from the legislature as to where the AG's opinion will go. Senator Janet Howell suspects, as she told The Washington Post, that it will be decided by the courts. Others speculate changes to the Constitution. While the state decides on these issues, hundreds of nonprofits await a decision on over $23 million in appropriations to provide essential services.