Middleburg Eyes Nonprofit to Expend Charitable Funds

The Middleburg Town Council last week discussed the creation of a nonprofit to give money from the town’s Health Center Fund to charitable purposes in town.

The proposed Middleburg Charitable Foundation could consist of seven voting members: perhaps two Town Council members, three in-town residents and two residents from the community at-large, whether they live in town or outside the corporate limits.

The goal of setting up a separate nonprofit would be to remove the Town Council from having direct control over the disbursements from the fund and to provide more flexibility.

Among the elements being considered is that the nonprofit leaders could be limited in the amount of money they could vote to donate in a given year, such as 10%. A unanimous vote among the board members could be required for the nonprofit to spend more than the maximum amount in a single year, and there could be a limit on that spending, perhaps at 33% or 55% of the funds.

The nonprofit’s proposed articles of incorporation could also establish requirements surrounding budgeting and spending to keep its business transparent. According to a staff report, creating the nonprofit would allow for the group to invest funds in ways the town can’t.

“This is going to be something really cool,” said Mayor Bridge Littleton.

While the group could be named the Middleburg Charitable Foundation, Town Attorney Martin Crim expressed concern that the name “foundation” could give the group the wrong connotation and make it more difficult to solicit funds. Crim also had concern that using the name “foundation” could make the group seem like a private foundation, which it would not be for federal tax purposes.

Eventually, the town would terminate the Health Center Fund to give the nonprofit full control of the town’s charitable donations. Presently, the Town Council makes those decisions.

The town’s Health Center Fund was established decades ago by a provision in the Health Center property’s incorporation document requiring the property owner to donate all revenue generated from the property, such as lease payments, to charity. The town owned the property for years and was only able to disperse money from the Health Center Fund with Town Council approval.

When the town sold the property to Old Ox Brewery in 2018 for $750,000, the money was deposited into the Health Center Fund.

Two and a half years later and the fund is down to $682,000. But the town still owes a $200,000 reimbursement to the fund; it pulled that money to use for community support programs amid the pandemic in 2020. Town Manager Danny Davis said that money would be repaid from the General Fund over a three-year period.

pszabo@loudounnow.com

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