Legislative Session

The Anti-Donation Clause or Article IX, Section 14 was included in New Mexico’s constitution (1912) to protect against fraud and unethical legislators. Article IV, Section 31 does not allow state funds to be given to any entity not under the absolute control of the state, except for the charitable institutions and hospitals that received appropriations from the legislative assembly in 1909.

Together, these laws complicate the provision of services, require multiple layers of bureaucratic review, and cause service providers and local governments to expend undue resources to provide services and solve problems.

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Burdens Local Governments

The anti-donation is frequently cited to prohibit state and local governments from funding the infrastructure needed by nonprofits to improve and expand their services to community members. Because Article IV, Section 31 does not allow state funds to go to any entity outside of its control, any assets purchased with state funds must be owned by local governments. This forces local governments to act as fiscal agents and property managers and adds layers of bureaucratic and administrative complexity.  Many local governments do not have the capacity to act as fiscal agents. The result is that the process, if it works at all, is complicated, costly, slow and inequitable.

Limits and Constrains Nonprofits

These laws also inhibit the development of infrastructure needed by nonprofits to better serve community members. For example, nonprofits may request capital outlay funds, but a local government must act as fiscal agent and own the asset as explained above. Additionally, if a nonprofit owns a building, it cannot request funds for repairs or expansion unless it signs over the ownership of the building and property to a local government.

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Nonprofits are trusted by their communities. As experts in their fields, nonprofits are often called on to carry out the work of government through contracts. This is often work the government cannot do as effectively or economically. If the state government could efficiently provide capital outlay funds to charitable nonprofits to enhance or expand their capacity to serve community members, more people would get the services they need. Charitable nonprofits have a proven track record of helping people and distributing resources as that is their function

Prohibits Emergency Relief and Legislative Efforts

On occasion, the anti-donation clause and Article IV, Section 31 have prevented the state from providing assistance during emergencies.
When legislators wanted to provide hotel vouchers to people displaced by a flood, they were advised that it would be a violation of the anti-donation clause.
During the early phase of the COVID pandemic, relief to individuals either went in the
form of a tax rebate, or people had to attest to being indigent as a result of the pandemic to qualify for financial relief.

HJR11

HJR11 will repeal and replace Article IX, Section 14  to clearly state that the state and its subsidiaries may donate public funds for public purposes, and repeal Article IV, Section 31 entirely. Before public funds are donated, implementing legislation must be enacted.   
 

• Repeal and Replace Article IX, Section 14  
  “Neither the state nor any county, school district or municipality shall indirectly or directly lend or pledge its credit in the aid of or make a donation of public funds to a private person or private entity; provided that a donation to a private person or private entity may be made if the donation is used to accomplish a public purpose. As used in this subsection, "public purpose" means for the benefit of the public health, safety or welfare.”

The goal of the simplified language is to increase the consistency of interpretation while maintaining safeguards for state assets.

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• Repeal Article IV, Section 31
  This section prohibits appropriations for charitable, educational or other benevolent purposes to any non-governmental entity not under the full control of the state.

 

HB290: The Vibrant Communities Act

HB290 is the enabling legislation that provides the guardrails and outlines a process for 501(c)(3) charitable nonprofits and 501(c)(12) cooperatives to access state funds. Project applications to be vetted and presented to the legislature for funding decisions.​