Is a private nonprofit arts council that takes some state grant money required to hold its board meetings open to the public under North Carolina's Open Meetings Law?
Plain-English summary
Faye Mitchell Henderson, with the Public Affairs Office of the NC Department of Cultural Resources, asked the AG whether the meetings of the Franklin County Arts Council, Inc. had to be open to the public under N.C.G.S. § 143-318.9 et seq. (the Open Meetings Law). Special Deputy AG Lorinzo L. Joyner said no, based on the specific facts of the Council's structure and relationship with government.
The Council was incorporated in 1979 as a private nonprofit under Chapter 55A and qualified as a 501(c)(3) tax-exempt organization. Its corporate purpose was to encourage, sponsor, develop, promote, and coordinate cultural and educational activities in Franklin County. Its bylaws made membership open to any individual, agency, or organization (public or private), gave each individual member one vote and each agency one representative vote, and limited any town or county government official to non-voting ex-officio roles for counsel or resource information only. The Council was not created by statute, local ordinance, or resolution. It elected its own directors, set its own policies, and made its own decisions. While it applied for and received financial support from various entities, including the State, it was not subject to supervision or control by state or local government.
The Open Meetings Law had just been substantially amended by the 1994 General Assembly, effective October 1, 1994. The amended law applied to any appointed or elected entity with two or more members that exercised or had authority to exercise a governmental function (legislative, policy-making, quasi-judicial, administrative, or advisory), regardless of how it was created. So being a private nonprofit corporation alone did not answer the question, because state and local governments often use nonprofits to carry out governmental functions, and in some circumstances those nonprofits are subject to the Open Meetings Law.
To determine when a nonprofit crosses that line, the AG drew on NC public-records cases. In News and Observer Publishing Co. v. Wake County Hospital System, Inc., 55 N.C. App. 1 (1981), the Court of Appeals held that the Wake County Hospital System, a nonprofit, was an agency of local government for Public Records Law purposes. The court looked at the totality of the relationship, not just funding. In Coats v. Sampson County Memorial Hospital, Inc., 264 N.C. 332 (1965), and Sides v. Cabarrus Memorial Hospital, Inc., 287 N.C. 14 (1975), the NC Supreme Court reached similar conclusions for hospitals operating under county or local-act control. The common thread: in every case where a private entity was treated as a local-government agency, the local government had clear supervisory responsibilities and control over the private entity. Financial support standing alone was not enough.
Applying that test, the Council's bylaws did not authorize it to perform governmental functions, and no government agency exercised or had authority to exercise supervisory responsibility or control over it. Therefore the Open Meetings Law did not apply to its meetings. The AG noted that this Office encourages boards and commissions to conduct as much business as possible in open meetings, particularly when public funds are involved, but that as a matter of law the Council was not required to do so.
Currency note
This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
The Open Meetings Law has been amended several times since 1994; the definitions and exceptions in Article 33C of Chapter 143 are not identical to the 1994 version. The "public body" definition and its application to private nonprofits performing public functions has continued to develop in NC case law. Any current question about whether a particular nonprofit is subject to the Open Meetings Law should consult the current Article 33C of Chapter 143, the most recent NC appellate decisions on the public-body question, and counsel familiar with this area.
Common questions
Q: What makes a private nonprofit subject to the Open Meetings Law?
A: The 1994 opinion's test: the local or state government must have clear supervisory responsibility and control over the entity, and the entity must perform a governmental function. Receiving grant money alone is not enough. The factual analysis looks at who appoints the board, who can remove the board, who sets the policies, whether the entity exercises delegated governmental authority, and other indicators of control.
Q: Why did the AG distinguish funding from control?
A: Because state and local governments fund a lot of private nonprofits to provide community services. Treating any grant recipient as a public body would sweep in arts councils, food pantries, homeless shelters, and similar private organizations, none of which exercise governmental authority. The control test focuses on whether the entity has effectively been deputized to exercise governmental power, not whether it has received tax dollars.
Q: What about the hospital cases the AG cited?
A: Those were factually distinct. Wake County Hospital System operated a county hospital and its board structure was tied to county government. Sampson County Memorial Hospital's directors were appointed by the county. Cabarrus Memorial Hospital was established by a local act of the General Assembly. In each, the county or General Assembly had set up supervisory control, and the entity was performing a clearly governmental function (operating a public hospital). The Franklin County Arts Council had none of those features.
Q: What if a Franklin County Commissioner had been a voting board member?
A: That fact alone would not have automatically made the Council a public body, but it would have moved the analysis. The 1994 bylaws specifically limited government officials to non-voting ex-officio roles, which the AG noted favorably. Voting government members might indicate more government involvement, but the totality test still controls.
Q: Did the AG encourage the Council to hold open meetings anyway?
A: Yes. The opinion explicitly says this Office encourages boards and commissions to conduct as much of their business as possible in open meetings, particularly when public funds are involved. The legal answer (the Open Meetings Law does not apply) and the policy recommendation (open the meetings anyway as a matter of good practice) are separate.
Background and statutory framework
NC's Open Meetings Law (Article 33C of Chapter 143, sections 143-318.9 et seq.) applies to "public bodies." The 1994 amendments, effective October 1, 1994, refined the definition to focus on whether an entity exercises governmental function rather than on how the entity was created. That move was meant to prevent governments from privatizing their decision-making just to escape the law.
But the amendments did not redraw the line as widely as it could have been drawn. The opinion's framework, borrowed from public-records cases, is the standard NC has continued to apply: a private nonprofit becomes a public body when government control plus governmental function combine. That standard still leaves room for autonomous private nonprofits, even ones that receive substantial state or local funding, to operate outside the Open Meetings Law.
The opinion is a useful early articulation of the test. Modern questions about nonprofits supporting community redevelopment, sports authorities, charter school nonprofits, and similar entities continue to apply this analysis.
Citations
- N.C.G.S. § 143-318.9 et seq. (Open Meetings Law; "public body" definition)
- N.C.G.S. § 132-1 (Public Records Law; analogous "agency of government" question)
- N.C.G.S. Chapter 55A (Non-profit Corporation Act; basis for Franklin County Arts Council's incorporation)
- Internal Revenue Code § 501(c)(3) (federal tax-exempt status of the Council)
- News and Observer Publishing Co. v. Wake County Hospital System, Inc., 55 N.C. App. 1 (1981) (NC Court of Appeals; nonprofit hospital was local-government agency under Public Records Law based on totality of supervisory relationship)
- Coats v. Sampson County Memorial Hospital, Inc., 264 N.C. 332 (1965) (NC Supreme Court; nonprofit operating county hospital with county-appointed directors held a county agency)
- Sides v. Cabarrus Memorial Hospital, Inc., 287 N.C. 14 (1975) (NC Supreme Court; hospital established by local act held a county agency)
Source
Original opinion text
| TO: | Faye Mitchell Henderson, Public Affairs Office, Department of Cultural Resources |
| FROM: | Lorinzo L. Joyner, Special Deputy Attorney General |
| DATE: | October 4, 1994 |
SUBJECT: Applicability of G.S. 143-318.9 et seq. to the Franklin County Arts Council, Inc.
You have inquired whether the meetings of the Franklin County Arts Council, Inc. (the Council) are required to be open to the public pursuant to G.S. 143-318.9 et seq. (hereafter "the Open Meetings Law"). By enacting the Open Meetings Law, the General Assembly has made the policy decision regarding what entities are covered by the Open Meetings Law. This Office encourages boards and commissions to conduct as much of their business as possible in open meetings, particularly when the expenditure of public funds is involved; however, it is my conclusion that the provisions of the Open Meetings Law do not apply to the Council.
My conclusion is based on the following information. During telephone discussions we had on September 20, and 28, 1994, you represented that the Council was not created by statute, local ordinance or resolution and that it has exclusive authority to elect its own board of directors, establish policies and make its own decisions. Although it makes grant applications to and receives financial support from a number of entities, including the State, you indicated that the Council is not subject to the supervision and control by either the State or local government.
I have also reviewed the Council's Articles of Incorporation and by-laws. These documents indicate that the Council was incorporated in 1979 as a private, non-profit corporation under G.S. 55A, Non-profit Corporation Act, and qualifies as an exempt organization under Section 501(c)(3) of the Internal Revenue Code. Article III of its by-laws defines the corporate purpose:
The corporation shall have as its purpose to encourage, sponsor, develop, promote, and coordinate cultural and educational activities in Franklin County. In addition to initiating its own arts programs, the Council may engage in and assist existing arts organizations, committees, or projects. The Council may also sponsor cooperative planning, research, fund raising, public education programs, administer property, and undertake other such services as deemed essential to the growth and appreciation of the visual, literary, and performing arts in the County.
The by-laws further provide that any individual, agency, or organization, public or private, may be eligible for membership, each individual member has one vote and each agency or organization has one representative vote. The Council's policies are established by the voting membership and executed by the Board of Directors. The Board may include town or county government officials; however, those officials may only serve as non-voting ex-officio members for counsel or resource information. (Emphasis added.)
As you are no doubt aware, generally the Open Meetings Law applies to "public bodies." Significant changes to the State's Open Meetings Law were made by the 1994 General Assembly which became effective October 1, 1994. The law, as amended, applies to any appointed or elected entity with two or more members which exercises or has the authority to exercise a governmental function (i.e., legislative, policy-making, quasi-judicial, administrative, or advisory), regardless of how it was created or established.
The Council's status as a private, non-profit corporation does not answer the question of whether it is subject to the Open Meetings Law. State and local governments often use private non-profit entities to assist with or carry out governmental functions and under some circumstances, these private non-profit corporations may be held to be subject to the Open Meetings Law. See, for instance, News and Observer Publishing Co. v. Wake County Hospital System, Inc., 55 N.C. App. 1 (1981), where the court held that the Wake County Hospital System, a non-profit corporation, was an agency of the local government for purposes of G.S. 132-1 and was therefore subject to the Public Records Law. The court looked beyond the issue of financial support and closely examined the totality of the relationship between the county and the non-profit corporation, identifying a number of factors that illustrated that the local government exercised supervisory responsibilities and control over the non-profit corporation. See also, Coats v. Sampson County Memorial Hospital, Inc., 264 N.C. 332 (1965) (non-profit corporation operating county-owned hospital with the corporation's board of directors appointed by the county held to be a county agency for purposes of venue under G.S. 1-77) and Sides v. Cabarrus Memorial Hospital, Inc., 287 N.C. 14 (1975) (hospital corporation established by a local act of the General Assembly was held to be an agency of the county for purposes of waiver of tort immunity through purchase of insurance.)
A review of the cases where our courts have found private entities to be local governmental agencies for various purposes reveals one common thread: in each case the local government had clear supervisory responsibilities and control over the private entity. The private entity's receipt of financial support from the governmental unit, standing alone, did not appear sufficient.
On the basis of the foregoing, it is my opinion that the Open Meetings Law does not apply to private non-profit entities unless it is clear from the totality of the relationship that the local government has supervisory responsibilities and control over the private entity which is exercising (or has the authority to exercise) a governmental function. The by-laws of the Franklin County Arts Council, Inc., do not appear to authorize the Council to perform any governmental functions; nor does any governmental agency appear to exercise or have the authority to exercise supervisory responsibility or control over the Council.
I hope that you find this information useful.