Minnehaha and Turner Counties may be asked to endorse and participate in a private nonprofit community action corporation. Can a county create or participate in such a corporation, contribute money to it, appoint county commissioners as board members, and was the counties' inclusion in the state community action agency through the Governor's 1974 executive order valid?
Plain-English summary
The mid-1970s federal Economic Opportunity Act program ran community action programs that combined federal funding with local government participation and private nonprofit organizations. South Dakota's experience was complicated. Before 1974, four multi-county private nonprofit community action agencies (including the Southeastern Council of Governments, SECOG) had served the state. In 1974 the Governor issued an executive order creating the South Dakota Office of Economic Opportunity (the South Dakota CAP) as the single state-wide community action agency. The state CAP then designated "delegates" including the prior multi-county nonprofits, which continued to operate but now under state authority.
By 1975 some counties (Minnehaha and Turner) were being approached to participate in a new private nonprofit community action corporation that would supplement the publicly delegated community action services. The counties had not formally voted to join the state CAP system in 1974; the federal rule was that counties had 30 days to opt out, and silence equaled acceptance. The counties wanted to know whether their original opt-in was valid and what role they could now play in the private nonprofit corporation.
AG Janklow answered five questions.
First, can a county "create or establish" a private nonprofit community action corporation? Not really. The nonprofit corporation statutes (Chapter 47-22) are available to any citizen, but a county as an entity cannot be an incorporator of a private nonprofit. Individual county officials can act as incorporators or directors in their personal capacities. The county itself is not the corporate parent.
Second, can a county participate in a private nonprofit community action corporation? Yes, in the sense of providing support. The county itself cannot be a member or director, but the county can lend support to a community action corporation that is properly structured to operate under the Economic Opportunity Act framework. SDCL 7-32-9 gives counties some authority to support community programs.
Third, can the county make financial contributions? Yes, on the same theory. Counties can contribute to community action programs that fit the statutory framework.
Fourth, if appointed as board members, in what capacity can the commissioners serve? They serve as county representatives to satisfy federal rules requiring local elected officials on community action boards. But the commissioner sitting on the board cannot individually bind the county. Boyd v. Lake County (S.D. 1949) confirms that a single commissioner's individual action does not commit the board.
Fifth, was the 1974 Executive Order designation valid without formal county action? Yes. The federal program structure presumed counties wanted to participate unless they opted out within 30 days. OEO Instruction 6302-2 also gave counties a continuing right to opt out later. Failure to opt out is not a violation of county sovereignty because the county was never compelled to do anything; it could exit at any time. The federal framework made the no-formal-action route both lawful and reversible.
Currency note
This opinion was issued in 1975 during AG William Janklow's tenure. Subsequent statutory amendments, court decisions, and changes in federal community action funding have substantially changed the structure of the programs at issue. The federal Economic Opportunity Act and its community action provisions have been replaced by the Community Services Block Grant (CSBG) and other successor programs. Treat this page as historical context, not current legal advice. Modern questions about county participation in private nonprofit corporations, county financial support of nonprofits, and the role of county commissioners on nonprofit boards should be verified against current SDCL chapter 7 and current federal and state nonprofit corporation rules.
What the opinion meant at the time
For Minnehaha and Turner Counties, the practical answers were: do not have the county itself incorporate the private nonprofit; let individual commissioners or other officials handle incorporation in their personal capacities; the county can contribute money to a properly structured community action corporation under SDCL 7-32-9; commissioners on the nonprofit board act as county representatives but do not bind the county individually.
For other counties facing similar invitations, the opinion provided a template. Counties have a supporting role in community action corporations, not a controlling role. The legal lines between county participation and county incorporation matter; counties should not slip into being treated as the corporate parent.
For community action corporation organizers, the opinion confirmed that getting county financial support and county-commissioner board service was lawful as long as the corporate structure stayed independent of the county itself. Commissioners served as one constituency on the board, not as agents of the county for binding purposes.
For the state CAP and its delegate agencies, the opinion supported the legitimacy of the 1974 designation process even though most counties had not formally voted in. The federal rules permitted the no-formal-action approach, and counties retained a continuing right to opt out.
Common questions
Q: What is a "community action agency"?
A: In 1975, it was a federally funded organization that delivered anti-poverty programs at the local level under the Economic Opportunity Act. Each state had a designated CAA structure. CAAs administered programs like Head Start, weatherization, employment training, and emergency assistance. They could be public agencies, multi-county consortia, or private nonprofits with public board representation.
Q: Why couldn't the county itself just incorporate the nonprofit?
A: Because counties are creatures of statute and can only act within their granted powers. South Dakota's county powers do not include forming private corporations. Counties can contribute to and support private corporations under specific authorizations, but the corporate parent role belongs to individual citizens or other private entities.
Q: What is SDCL 7-32-9?
A: A statute authorizing counties to support various community programs. Janklow cited it as the authority for county financial support of properly structured community action corporations.
Q: How does Boyd v. Lake County fit in?
A: It is the 1949 case holding that a single county commissioner's individual action does not bind the county. The board acts as a board; individual board members cannot commit the county on their own. That principle applied directly to the question of what a county commissioner on a community action board could do as a "county representative."
Q: What was the federal opt-out mechanism?
A: Under the Economic Opportunity Act's community action provisions, the program structure presumed county participation unless the county actively opted out. The original 30-day window applied at the time of state-CAP designation. OEO Instruction 6302-2 then made the opt-out option continuing, so a county could leave later if it changed its mind.
Q: Did the counties have to refund any federal money already received?
A: The opinion did not address refund obligations. The opt-out mechanism likely focused on future participation rather than retroactive treatment of past funding.
Q: Could the county dictate the community action corporation's priorities through commissioner board members?
A: No. The commissioners sat on the board as representatives, not as agents. The corporation's decisions remained with its full board acting collectively, not with individual commissioners' agendas.
Background and statutory framework
The Economic Opportunity Act of 1964 created the community action program as a key federal anti-poverty initiative. Each state's structure varied, but the common model combined federal funding with local public-private partnerships. Community action agencies had to have tripartite boards (public sector, low-income community, private sector) under federal rules, which is why federal regulations required county elected official representation.
South Dakota's pre-1974 structure was decentralized: four multi-county nonprofits operated as community action agencies. Each handled its own region. SECOG covered southeastern South Dakota.
Executive Order 73-21 issued by Governor Kneip (the 1973 EO that took effect February 1, 1974) restructured the system. A single state agency (South Dakota CAP / Office of Economic Opportunity) became the official statewide community action agency, with the prior multi-county nonprofits relegated to "delegate" status. The opinion's questioner was operating in a moment when the new structure was being implemented.
The 1975 question about a new private nonprofit corporation reflects a normal pattern in community action: even after a state CAP is designated, private nonprofits often spring up to provide niche services or supplement state programs. The legal framework Janklow articulated kept counties at arm's length from incorporating these nonprofits while preserving the counties' ability to participate, fund, and supply board members.
Citations and references
Statutes:
- SDCL ch. 1-24 (county home rule and intergovernmental cooperation)
- SDCL ch. 47-22 (nonprofit corporation statutes)
- SDCL 7-32-9 (county support for community programs)
Federal law:
- 42 U.S.C. §§ 2790-2797 (Economic Opportunity Act community action provisions)
- Executive Order 73-21 (creating South Dakota Office of Economic Opportunity)
- OEO Instruction 6302-2 (continuing county opt-out right)
Cases:
- Boyd v. Lake County, 72 S.D. 431, 36 N.W.2d 384 (1949) (single commissioner cannot bind county)
Source
Original opinion text
County participation in private community action agency corporations
Dear Messrs. Kean and Haar:
You have requested an official opinion from this office based on the following factual situation:
FACTS:
Minnehaha and Turner Counties may soon be requested to endorse, participate in, contribute to, and appoint one board member to a private, nonprofit community action corporation. The envisioned corporation is designed to supplement those programs and services currently offered the poor by a local public community action agency, created pursuant to SDCL 1-24, as a delegate to the South Dakota Community Action Agency.
On February 1, 1974, by an Executive Order of the Governor, the South Dakota Community Action Agency, also sometimes referred to as the South Dakota CAP, was created. Prior thereto, Turner County and Minnehaha County, together with other counties in the region, were part of an agency known as the Southeastern Council of Governments (SECOG). After February 1, 1974, SECOG became a part of the South Dakota CAP.
It appears by way of the Executive Order of February 1, 1974, all counties within the State were given a specific time limit to accept the designation and to be included within the South Dakota CAP. The lack of any response within the thirty days was treated as a county acceptance. This thirty-day period was not part of the Executive Order of February 1, 1974, but instead was a requirement set forth by the federal act or regulations which initiated the Exective Order.
It appears that the Board of County Commissioners of Turner and Minnehaha Counties, together with the other counties in SECOG, did not take any formal action or enter into or accept any agreement or designation to be a part of the South Dakota Community Action Agency, i.e., South Dakota CAP.
Based on the above facts you ask the following questions:
QUESTIONS:
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Is a county authorized to create or establish a private, nonprofit community action corporation?
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Is a county authorized to become a party to or participate in a private, nonprofit community action corporation?
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Is a county authorized to make financial contributions to a private, nonprofit community action corporation?
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If appointed as a board member to a private, nonprofit community action corporation, in what capacity may the appointed county commissioners serve?
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Can a board of county commissioners, in other words, a county, without formal action by the board, as a board, enter into or accept an agreement or designation to be a part of a state agency created by Executive Order of the Governor?
IN RE QUESTION NO. 1:
In responding to your first question, it is difficult to be specific because I am not certain what you mean by the term "create or establish." The nonprofit corporation statutes are available for any citizen in South Dakota to use. If a nonprofit corporation structure could be of benefit to a county purpose, I see no reason why a corporation could not be set up by going through the separate steps of incorporating under Chapter 47-22.
People who happen to be county officials might act as incorporators or directors, but this does not mean that the county, in effect, "creates or establishes" the corporation.
A reading of 42 U.S.C.A. 2790 to 2797, inclusive, indicates that the United States Congress intended local government entities or private nonprofit agencies to be involved in implementing the provisions of the Economic Opportunity Act on a local level. Thus, I can see reasons for a private, nonprofit organization with a proper structure being available in order to implement this federal legislation. This does not mean, however, that counties could be the "creator" of these nonprofit organizations referred to above.
IN RE QUESTIONS NOS. 2 AND 3:
In reference to your second and third questions, I believe it is possible for county officers such as county commissioners to be involved in the nonprofit private community action corporation. I do not believe that the county as such can act as an incorporator or director. A county could, however, in my view be authorized to give support to such a properly structured nonprofit community action agency operating as a community action agency under 42 U.S.C.A. 2790 to 2979, inclusive. (See SDCL 7-32-9.)
IN RE QUESTION NO. 4:
As to your fourth question, it appears to me that a county commissioner who was appointed to a board of directors of a private, nonprofit community action corporation could serve on the board as a representative of the county for purposes of satisfying requirements of federal law that the private, nonprofit community action corporation have an administrative board that is composed in part of elected county officials. I do not believe, however, that the county commissioner sitting on this board could thereby individually bind the county to matters by his individual actions. Boyd v. Lake County, 72 S.D. 431, 36 N.W. 2d 384 (1949).
IN RE QUESTION NO. 5:
In response to the final question raised above, it is important to note that the Economic Opportunity Act of 1967, as amended, provided substantial amounts of federal monetary assistance to local governmental and private, nonprofit entities to combat the sources and effects of poverty on the people of this country. The thrust of the various programs of assistance in this legislation was to work through local community action agencies and projects. Pursuant to 42 U.S.C.A. § 2790, Executive Order 73-21 established the South Dakota Economic Opportunity Office as the official community action agency for the State of South Dakota (excluding reservation areas). This Executive Order was the implementation of the Governor's decision, after consulting with various advisory groups, to have one central state community action agency rather than numerous localized ones. Prior to this Executive Order, four multicounty private, nonprofit community action agencies had been established and were operative. After Executive Order 73-21 was issued, federal authorities withdrew recognition of these private, nonprofit agencies and recognized instead the state agency, i.e., the South Dakota Office of Economic Opportunity. Subsequent to this recognition, the State then recognized various "delegate" agencies including SECOG and the four multicounty nonprofit community action agencies which had been previously established.
The programs and structures of the Economic Opportunity Act were such that after the designation of the central state agency, all counties in the state were given the choice to be in or out of the programs made available under the Act. Counties were given thirty days to opt out at the beginning or the presumption would be that the counties did not wish to have the programs available under this legislation to be available in their counties. After the counties were "included" by this act of a failure to opt out, counties would still, however, have been able to get out if they wanted to. Under OEO Instruction 6302-2, it is clear that the option to "opt out" of the program was a continuing option of the county government.
Thus, in my view, a county as such did not need to choose to be included by any formal action by the county commissioners, since the county was not obligated or bound by this act of omission. The county became "involved" initially by virtue of federal requirements which presumed that counties wanted the federal assistance available in these programs unless they said no within thirty days or exercised the option later on to get out of the program. Based on this understanding of what has occurred, it does not appear to me that the sovereign powers of the county were violated or that the county government was thereby forced to improperly assume any 'obligations' without requisite formal action of the board of county commissioners.
Respectfully submitted,
William J. Janklow
Attorney General
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