Some taxpayers might wonder how outside agencies such as the Boys & Girls Club of Beaufort County or Eagle’s Wings are able to receive tax dollars from a town, city or county. North Carolina law allows it as long as the receiving agency meets a “public purpose.”

Before hearing funding requests from such organizations last week, an explanation of “public purpose” was provided to the Washington City Council by City Attorney Franz Holscher. City Manager Bobby Roberson arranged for Holscher to review the law with the council.

“I think it’s important for us, as a governing body, to understand when you want to spend taxpayers’ dollars, it’s got to be for a public purpose. … I’d like to call upon the city attorney to give you a little background about what constitutes a public purpose,” Roberson said.

Holscher said local governments are allowed to make contributions to private entities, but it’s better to characterize them as grants.

“We often think of that as being nonprofits, but it’s not limited to nonprofits,” Holscher said. “A local government can make a grant to any private entity, a for-profit or nonprofit, as long as two things occur — the contribution is expended by that third party for public purpose that the local government is authorized by statute to engage in.”

Those purposes include recreation, libraries, the arts and similar activities, programs and services, he noted.

“The second thing is the expenditure must benefit the citizens of the local government, generally. It’s not to be expended for the sole benefit of particular persons or particular interests,” Holscher said. “So, in other words, a private entity must expend the funds it receives on projects, services or activities that the local government could have supported directly.”

Holscher said state law and case law do not provide a definition of public purpose. “Cases that have tried to establish what a public purpose is generally have two guiding principles. One is the activity must involve a reasonable connection with the convenience and necessity of the unit of government and, two, it must benefit the public generally as opposed to special interests or persons,” Holscher said. “Generally speaking, an activity that promotes the welfare of the city and the welfare of its citizens is a public purpose.”

Holscher said that, in his opinion, each of the organizations seeking money from the city satisfied the public-purpose requirement.

Thirteen organizations, including outside agencies and economic-development entities, have submitted requests for city funds totaling $218,150 during the upcoming fiscal year. In its current fiscal-year budget, the city allocated $159,075 for those agencies. For the most part, the city has reduced funding for the agencies each year in the past several years. The council took no action on the requests; its funding decision concerning the agencies will come later during budget work sessions.