Public Officials Serving on Nonprofit Boards
 

A North Carolina state law, effective January 1, 2022, impacts public officials serving on nonprofit boards. N.C.G.S. § 14-234.3 prohibits a public official in making or administering a contract, grant, loan, or other appropriation with any nonprofit with which the public official is associated. The law requires officials to recuse themselves from funding decisions, meaning that officials who serve on nonprofit boards will not be able to vote on local government budgets that include funding for nonprofit on whose boards they serve. Knowing violation by a public official is a misdemeanor, and a contract in violation of the law is rendered void.

The law applies only to cities, towns, or villages with more than 15,000 residents and to counties that have municipalities with 15,000 or more residents, making it applicable in about 60 of North Carolina’s 100 counties. It is applicable to officials elected or appointed to serve, and not to government staff or contractors. The prohibition is against actions taken “knowingly” by public officials, meaning that the law will not apply where nonprofits receive subgrants or subcontracts from other organizations that receive local funding, even if a board member of the nonprofit serves as a public official.

Nothing in the law prohibits public officials from serving on nonprofit boards, but there is a concern that officials will resign from nonprofit boards to ensure compliance with the new law.