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Nick’s Kids, The Malzahn Family Foundation among charities left in limbo by Alabama Ethics Commission

A panelist at a recent discussion on ethics reform at Cumberland School of Law mentioned that he saw value in “leaving some of the lines a little bit fuzzy” when it comes to how the law applies.

The Alabama Ethics Commission may have adopted the same approach when it comes to charities and non-profit organizations which bear the name of a public official or public employee.

A commission opinion stated that the activities of any non-profit organization named for a public official or public employee face a higher level of legal scrutiny than others.

What that means for the operation of those groups remains uncertain.

A frequently overlooked fact is that Nick Saban and Gus Malzahn are considered public employees under Alabama’s ethics law.

All of the legal and regulatory requirements imposed upon public officials, public employees and their families also apply to Saban and Malzahn.

Both are required to file an annual Statement of Economic Interests with the Alabama Ethics Commission.

And, in this instance, their respective charities fall under the kind identified by the commission as “a nonprofit” which “bears the name of a public official or employee.”

The opinion, issued unanimously by the Alabama Ethics Commission at its last meeting, was in response to a request from the Alabama Association of Nonprofits for clarification on fundraising limitations for certain nonprofit board members.

As part of that opinion, the commission also concluded that the activities of this particular class of charities required closer examination.

The commission stated the following:

The risk of corruption increases when the official or family member is compensated for service on the board. Likewise, when a nonprofit bears the name of a public official or employee, there is such a close connection with the public servant that fundraising for those nonprofits should be examined on a case by case basis.

Numerous nonprofits bear the name of people classified as public officials or public employees under Alabama’s ethics law, so Saban and Malzahn’s situation is not unique to them.

Tom Albritton, executive director of the Alabama Ethics Commission, told Yellowhammer News it is a permissible structure but there are reasons the commission makes its distinction.

“There’s nothing wrong with non-profits that bear the name of a public official or employee, but the fact that it does bear their name creates a direct connection between that public servant and the nonprofit organization and its mission,” said Albritton. “As you’ll note from the opinion itself, the Commission specifically said that it was not taking a position one way or the other on that very specific issue.”

And the decision to not elaborate on what limitations exist for this class of charities could place them and their board members (who in many cases are members of their families) in awkward positions of uncertainty.

Matt McDonald, a partner at the Jones Walker law firm and panelist at the Cumberland School of Law forum, told Yellowhammer News that he would have some specific advice for any nonprofits among the group singled out by the commission.

“Uncertainty exists,” concluded McDonald. “I would advise them to go get a formal ethics opinion. Fundraising is what seems to be drawing the scrutiny.”

The commission’s opinion outlined that public officials, employees and family members may serve on nonprofit boards and may participate in fundraising so long as it is not for personal gain, no official resources are used and no solicitations are made to lobbyists.

Yet the commission wrote that different rules may apply to public employee-named organizations.

According to Albritton, the commission specifically carved out these groups from its opinion.

“The point of putting that language in the opinion, however, was simply to isolate its application to the facts presented,” he said. “Advisory Opinions provide protection from prosecution, and given the broad nature of the question asked, but more than that the broad diversity reflected within the Association requesting the opinion, the Commission felt it was appropriate to limit its application.”

When discussing changes to the ethics law as part of the Cumberland panel, chairman of the Alabama Ethics Commission Jerry Fielding charged the Alabama legislature with taking an approach geared toward “simplification and clarification.”

“We need the law, but we need some way to make it more clear and more simplified,” Fielding said.

Tim Howe is an owner and editor of Yellowhammer News

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