LEGAL Q&A: Fundraising and Unanticipated Revenue

Jonathan Cowal, Municipal Services Counsel

Fundraising can be an important tool in a municipality’s toolbox for supplementing the budget and helping fund projects and events throughout the year. It is vital that municipalities understand the different ways in which cities and towns can accept funds throughout the year and to make sure that the funds are handled appropriately so municipalities can continue to reap the benefits of unanticipated revenue.

Q: What are the statutes that allow for municipalities to accept and spend funds throughout the year that were not known or anticipated as part of the annual budgeting process?

A: There are two ways in which towns tend to accept unanticipated revenue, RSA 31:19 and RSA 31:95-b.

RSA 31:95-b is an optional power that can be granted to select board to apply for unanticipated money from state, federal governmental or other private source. This statute is most often used to apply for and accept grants. The statute requires a public hearing if the amount is over $10,000. RSA 31:95-b is not really intended to be used for acceptance of small donations by departments, committees, etc. The language of the statute implies that this is used for a lump sum acceptance of funds specifically applied for by the select board to include private grants. It is important to remember that the acceptance of grants under this provision cannot require the town to spend additional or matching funds unless there was already an appropriation somewhere in the budget to allow for such an expenditure. Otherwise, the town needs to call a special town meeting to authorize an expenditure for the additional matching funds needed to accept the grant. Once obtained, these funds are controlled by the select board to be spent for the purposes of the granting agency. They are accepted by the select board for a specific purpose and the select board acts as the agents to authorize expenditure.

RSA 31:19 is the statute better designed for fundraising and to accept smaller gifts and donations. This is also an optional power that the town may grant power to the select board to accept gifts, legacies, and devises made to the town throughout the year. The funds are accepted by the select board and turned over to the trustees of the trust funds. The trustees are agents to expend and must determine that any expenditure of these funds adheres to the original purpose of donation.

Finally, remember that if your town has not authorized the select board to accept unanticipated revenue, your only option may be to call a special town meeting (unless the authorizing statute permits acceptance even in the absence of adopting RSA 31:95-b)!

Q: What would the fundraising process look like if the town wanted to raise money to fund a specific project or department?

A:  All fundraising by the town would result in the town receiving a gift of money.  Gifts of money are accepted by the select board using the authority delegated by town meeting under RSA 31:19, II.  There are a number of different mechanisms the town could use to gather in donations (i.e., 50/50 raffle, events, direction donations, etc.). These funds would be received by the select board and accepted through a motion made at a public meeting of the select board.  That motion would reflect the purposes of the donation and direct the disposition of the received funds into an appropriate trust account in the custody of the trustees of trust funds.  Something like the following:

Madam chair, I move the select board accept the $500.00 dollars received from the Old Home Day events intended to provide funding for the repair and restoration of the old town hall, and to direct the funds be held by the trustees of trust funds in a new trust account called the Old Town Hall Repair and Restoration Trust Fund.  Disbursements to be made by further vote of the select board related to the purposes of the Old Town Hall Repair and Restoration Fund. 

If done properly, the select board would be able to vote to expend these funds throughout the year if they are expended for the above-mentioned purpose.

Q: What type of accounts can be used to store donated funds? Can we place donations into a Capital Reserve Fund?

A: Capital Reserve funds never receive private funds or donations.  Capital Reserve Funds are funded by public money that is raised and appropriated by the legislative body (town meeting).

Expendable Trust Funds, on the other hand, are permitted to receive private donations as stated in RSA 31:19-a, IV: The local legislative body may authorize the acceptance of privately donated gifts, legacies, and devises to be utilized for the same purposes as a trust fund created under this section; provided, however, that such gifts, legacies, or devises shall be invested and accounted for separately from, and not commingled with, amounts appropriated under paragraph I, and shall be subject to the custody and investment provisions applicable to trust funds accepted under RSA 31:19.

Private donations are never deposited into the town’s general fund, they are always kept separate in trust accounts in the custody of the trustees of trust funds. If a private group wants to engage in fundraising on behalf of the town, the fundraising should be handled entirely by those private groups. Then, when the private group or nonprofits wishes to make a donation to the town for a specific purpose, the select board would receive that gift in the manner described above.

Q: Can the Library Trustees accept donations as well?

A:  There are two statutes, similar to those which apply to the select board, which will allow the library trustees to accept funds on behalf of the library. RSA 202-A:4-c and RSA 202-A:4-d allow the library trustees to accept and expend gifts, and to accept personal property on behalf of the library.

Much like RSA 31:19 and 31:95-b, the town must first vote to grant the library trustees this authority. In the case of unanticipated revenue, the statue requires the library trustees to hold a public hearing if the amount is $5,000 or more.

Any town at an annual meeting may adopt an article authorizing the public library trustees to accept gifts of personal property, other than money, which may be offered to the library for any public purpose, and such authorization shall remain in effect until rescinded by a vote of town meeting. The acceptance of property may not bind the town or the library trustees to raise, appropriate, or expend any public funds for the operation, maintenance, repair, or replacement of such personal property. The town may choose to appropriate funds in future budgets to support a gift of personal property, but continued maintenance, for example, cannot be a binding condition.

Q:  We have a generous donor who wants to remain anonymous. Are we allowed to accept funds from anonymous sources?

A: In general, it is not a good idea to accept funds from anonymous sources. As provided in RSA 31:33, “[i]n a year in which a town accepts gifts, legacies and devises for any trust created, the trustees and auditor shall print the names of the donors and the value of such gifts, legacies and devises at the time of donation in the annual town report.”  This statute would apply to donations accepted by the town or library. Furthermore, the names of donors to the town would likely be subject to disclosure under a Right-to-Know request. Since the town would not be able to provide an adequate accounting of these funds if the donor remained anonymous, it is generally not considered a good practice.

Q: Someone who made a donation to the town is wondering where they can get information on any tax incentives for said donation. Where should I refer them?

A: If a donor seeks information on the tax deductibility of the donation from the town, you should direct the donor to this website: .    

Jonathan Cowal is the Municipal Services Counsel with the New Hampshire Municipal Association.  He may be contacted at 603.224.7447 or at



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