STATE OF ALABAMA

ETHICS COMMISSIONMAILING ADDRESS

P.O. BOX 4840

MONTGOMERY, AL36103-4840

STREET ADDRESS

RSA UNION

100 NORTH UNION STREET

SUITE 104

MONTGOMERY, AL 36104COMMISSIONERS

John H. Cooper, Esq., Chair

Cameron McDonald Vowell, Ph.D., Vice-Chair

Michael K.K. Choy, Esq.Linda L. Green

Nancy Edwards Eldridge

James L. Sumner, Jr.Director

TELEPHONE (334) 242-2997

FAX (334) 242-0248WEB SITE: www.ethics.alalinc.net

December 5, 2007

ADVISORY OPINION NO. 2007-22Mr. William R. FosterChief Executive OfficerBirmingham Zoo2630 Cahaba RoadBirmingham, Alabama 35223-1154

Reporting Requirements/HospitalityProvisions Under The Ethics Law

Hospitality, where the expenditure is madeto, or on behalf of, the Birmingham Zoo orany other organization to which a federalincome tax deduction is permitted underSection 170 of the Internal Revenue Code of1986, or any charitable, education oreleemosynary cause of Section 501 of Title26 of the U.S. Code, does not have to bereported under the reporting requirements ofSection 36-25-1(31)(b)(3); provided, that thepublic official or public employee does notreceive any direct financial benefit, and theexpenditure is legitimately made to, or onbehalf of, the charitable organization.

"Dinner mementos" in the form ofpaperweights with the Zoo logo, or othersimilar items, may be accepted by publicofficials/public employees; provided, thatthe "dinner memento" is a promotional itemcreated expressly for the purpose ofdistributing to the general public and is of anominal value.

Mr. William R. FosterAdvisory Opinion No. 2007-22Page two

Dear Mr. Foster:

The Alabama Ethics Commission is in receipt of your request for an Advisory Opinion ofthis Commission, and this opinion is issued pursuant to that request.

QUESTION PRESENTED

Which, if any, of the reporting provisions of Section 36-25-1(31)(b) apply to theprovision of hospitality, when all expenditures involved are made to, or on behalf of, acharitable/eleemosynary entity?

FACTS AND ANALYSIS

The facts as have been presented to this Commission are as follows:

The Birmingham Zoo is an educational organization and contributions to it are deductibleunder Section 501(c)(3) and other provisions of the Internal Revenue Code. As a non-profitorganization, the Zoo raises funds for its activities through various means including the hostingof periodic events at which it charges donors for tickets and provides hospitality to those inattendance. The Zoo is requesting that the Ethics Commission provide it with an AdvisoryOpinion regarding the application of the Alabama Ethics Act to the Zoo. Specifically, the Zoo isseeking guidance regarding which, if any, of the reporting provisions under the Alabama EthicsAct apply to the provision of hospitality to public officials/public employees at these periodicevents that benefit the Zoo.

By way of example, the Zoo offers the following illustrations:

Periodically, the Birmingham Zoo hosts dinners and other events at which it raises fundsfor its operations and recognizes its supporters. Tickets for these events often cost $1,000 and afull table could cost a donor $10,000. The Zoo's costs for food and beverages that would beprovided to dinner attendees may exceed $125 per person. The difference between the ticket costand the food and beverage cost is retained by the Zoo as proceeds from the fund raising event.

The Zoo may wish to invite local and other public officials who are interested in the Zoo(and their spouses or guests) to attend such events. The Zoo does not plan to charge publicofficials for their tickets. Instead, it plans to provide them with tickets to the dinner on acomplimentary basis. The Zoo would use funds donated to it (including possibly fundscontributed by donors for the event) to offset the incremental costs associated with these

Mr. William R. FosterAdvisory Opinion No. 2007-22Page three

complimentary tickets and the associated hospitality. Donors who purchase their tickets from theZoo would receive any income tax deduction associated with that contribution. No other benefitswould be provided to attendees at the dinner.

In relation to this example, Mr. William R. Foster, Chief Executive Officer, BirminghamZoo, offers that Alabama Code, Section 36-25-1(31)(b)(3) provides that, " . . . the reportingrequirement contained in this section shall not apply" when hospitality or a ticket to asocial event is provided to a public official where the expenditures are made to or onbehalf of a Section 501 (c)(3) organization so long as a public official does not receive "anydirect financial benefit." In this instance, the Zoo would be providing hospitality in the form offood and beverages to public officials (and spouses or guests) who attend the dinner. Publicofficials who attend would receive only hospitality (food and beverages) and would not receiveany monetary benefit. If the total cost of a ticket is taken into consideration (or if the value of thefood and beverages to be offered at the dinner exceeds $125 per person), then the Zoo'sprovision of two dinner tickets to a public official would exceed the reporting threshold of $250 -- absent the Zoo's status as a Section 501(c)(3) organization. Accordingly, the Birmingham Zoorequests from the Commission an Advisory Opinion clarifying whether it has a reportingobligation under Section 36-25-1(31)(b)(3), when it provides a public official with ticket(s) thatmay have a value of more than $250 as described above.

Under a second scenario, the Commission is asked to assume that a Zoo donor (who mayor may not be on the Zoo's Board) has purchased tickets or a table for the dinner from the Zooand wishes to invite a public official (and spouse or guest) to the dinner and provide them withtickets. As discussed above, because the donor is making the "expenditure" to the Zoo, Mr.Foster argues that the Ethics Act's reporting requirements do not seem to apply even if the donorpaid over $250 for the tickets and even if the value of the food and beverages provided at thedinner exceeds $250 --but only so long as no "direct financial benefit" is provided to the publicofficial by the donor or by the Zoo. Accordingly, the Birmingham Zoo requests an AdvisoryOpinion from the Commission clarifying whether under this second factual situation, the Zoo orits donor would have a reporting obligation under Section 36-25-1(31)(b)(3), when a donorprovides a public official with tickets that have a value of more than $250 as described above.

In conclusion, Mr. Foster asks that, in the event that the Commission determines thatattendance by a public official and his or her spouse at a Zoo dinner must be reported by eitherthe Zoo or its donor(s), then he asks for guidance regarding how to determine the value that is tobe reported. Furthermore, the Zoo wishes to determine whether, in the context of the aboverequest, it is permissible for the Zoo to provide all dinner attendees -including any publicofficials-with a dinner memento (such as a stone paperweight with an animal image and theZoo's name or an animal wood carving). Specifically, the Birmingham Zoo requests an AdvisoryOpinion from the Commission clarifying whether the Zoo may provide attendees (including any

Mr. William R. FosterAdvisory Opinion No. 2007-22Page four

public officials who may be attending) with a memento such as that described here or whethersuch a memento would be prohibited under the Alabama Ethics Act.

The Alabama Ethics Law, Section 36-25-1(23), Code of Alabama. 1975, defines a publicemployee as:

"(23) PUBLIC EMPLOYEE. Any person employed at the state, county, ormunicipal level of government or their instrumentalities, including governmentalcorporations and authorities, but excluding employees of hospitals or other healthcare corporations including contract employees ofthose hospitals or other healthcare corporations, who is paid in whole or in part from state, county or municipalfunds. For purposes of this chapter, a public employee does not include a personemployed on a part-time basis whose employment is limited to providingprofessional services other than lobbying, the compensation for which constitutesless than 50 percent of the part-time employee's income."

Section 36-25-1(11) defines a family member of the public employee as:

"The spouse or a dependent of the public employee."

Section 36-25-1(24) defines a public official as:

"(24) PUBLIC OFFICIAL. Any person elected to public office, whether or notthat person has taken office, by the vote of the people at state, county, or .

municipal level of government or their instrumentalities, including governmentalcorporations, and any person appointed to a position at the state, county, ormunicipal level of government or their instrumentalities, including governmentalcorporations. For purposes of this chapter, a public official includes the chairsand vice-chairs or the equivalent offices of each state political party as defined inSection 17-16-2."

Section 3{)-25-1(12)defines a family member of the public official as:

"(12) FAMILY MEMBER OF THE PUBLIC OFFICIAL. The spouse, adependent, an adult child and his or her spouse, a parent, a spouse's parents, asibling and his or her spouse, of the public official."

Section 36-25-5(a) states:

"(a) No public official or public employee shall use or cause to be used his or herofficial position or office to obtain personal gain for himself or herself, or family

Mr. William R. FosterAdvisory Opinion No. 2007-22Page five

member of the public employee or family member of the public official, or anybusiness with which the person is associated unless the use and gain areotherwise specifically authorized by law. Personal gain is achieved when thepublic official, public employee, or a family member thereof receives, obtains,exerts control over, or otherwise converts to personal use the object constitutingsuch personal gain."

Section 36-25-1(31)(a) defines a thing of value as:

"(31) THING OF VALUE.

a. Any gift, benefit, favor, service, gratuity, tickets or passes to an entertainment,social or sporting event offered only to public officials, unsecured loan, other thanthose loans made in the ordinary course of business, reward, promise of futureemployment, or honoraria."

Section 36-25-1(31)(b) defines what the term, thing of value, excludes:

"b. The term, thing of value, does not include any of the following, provided thatno particular course of action is required as a condition to the receipt thereof:

1. Campaign contribution.

2. Seasonal gifts of an insignificant economic value of less than one hundreddollars ($100) if the aggregate value of such gifts from any single donor is lessthan two hundred fifty dollars ($250) during anyone calendar year.

3. Hospitality extended to a public official, public employee, and his or herrespective household as a social occasion in the form of food and beverages wherethe provider is present, lodging in the continental United States and Alaskaincidental to the social occasion, and tickets to social or sporting events if thehospitality does not extend beyond three consecutive days and is not continuous innature and the aggregate value of such hospitality in excess of two hundred fiftydollars ($250) within a calendar day is reported to the commission by the providerprovided that the reporting requirement contained in this section shall notapply where the expenditures are made to or on behalf of an organization towhich a federal income tax deduction is permitted under subparagraph (A)of paragraph (1) of subsection (b) of Section 170 ofthe Internal RevenueCode of 1986, as amended, or any charitable, education or eleemosynarycause of Section 501 of Title 26 of the U.S. Code, and where the public Qfficial

Mr. William R. Foster

Advisory Opinion No. 2007-22Page six

or public employee does not receive any direct financial benefit. Thereporting shall include the name or names of the recipient or recipients, thevalue of the entire expenditure, the date or dates of the expenditure, and thetype of expenditure. (Emphasis added.)

4. Reasonable transportation, food and beverages where the provider is present,and lodging expenses in the continental United States and Alaska which areprovided in conjunction with an educational or informational purpose, togetherwith any hospitality associated therewith; provided, that such hospitality is lessthan 50 percent of the time spent at such event, and provided further that if theaggregate value of such transportation, lodging, food, beverages, and anyhospitality provided to such public employee, public official, and his or herrespective household is in excess of two hundred fifty dollars ($250) within acalendar day the total amount expended shall be reported to the commission bythe provider. The reporting shall include the name or names of the recipient orrecipients, the value of the entire expenditure, the date or dates of the expenditure,and the type of expenditure.

5. Payment of or reimbursement for actual and necessary expenditures for traveland subsistence of a public official or public employee in connection with aneconomic development research or trade mission, or for attendance at a mission ormeeting in which he or she is scheduled to meaningfully participate, or regardingmatters related to his or her official duties, and for which attendance noreimbursement is made by the state; provided, that any hospitality in the form ofentertainment, recreation, or sporting events shall constitute less than 25% of thetime spent in connection with the event. If the aggregate value of any suchhospitality extended to the public employee, public official, and his or herrespective household is in excess of two hundred fifty dollars ($250) within acalendar day, the total amount expended for that day shall be reported to thecommission by the provider. The reporting shall include the name or names of therecipient or recipients, the value of such expenditures, the date or dates of theexpenditure, and the type of expenditure."

6. Promotional items commonly distributed to the general public and food orbeverages of a nominal value. (Emphasis added.)

c. Nothing in this chapter shall be deemed to limit, prohibit, or otherwise requirethe disclosure of a personal gift made to a public official or public employee froma spouse, intended spouse, dependent, adult child, sibling, parent, grandparent,uncle, aunt, nephews, nieces or cousins of the public official or public employee,except as otherwise provided by law.

Mr. William R. Foster

Advisory Opinion No. 2007-22Page seven

d. Nothing in this chapter shall be deemed to limit, prohibit, or otherwise requirethe disclosure of gifts through inheritance received by a public employee or publicofficial."

It is important to note at the outset that the exceptions to the definition of a "thing ofvalue" do not include "direct financial benefit." It is, therefore, to be assumed that the EthicsLaw prohibits cash gifts to individuals, other than a campaign contribution.

The fact that certain items are required to be reported to the Ethics Commission, assumesthat a benefit is to be had by the recipient of that hospitality. There are situations, however,where, while a benefit may be somewhat incidental to an event, the primary benefit accrues to acharitable or non-profit organization. When the event is of a purely charitable nature, the lawexcludes these expenditures from the reporting requirements.

For this exemption to apply, for example, the cost of the hospitality must be paid directlyto the charitable/non-profit organization. In this case, the purchase of the tickets, food andbeverages, etc., must go directly to the Birmingham Zoo.

Likewise, the expenditure related to the social event, must be borne directly by thecharitable/non-profit organization, again, in this case, the Birmingham Zoo.

"Dinner mementos" in the form of paperweights with the Zoo logo, or other similaritems, may be accepted by public officials/public employees; provided, that the "dinnermemento" is a promotional item created expressly for the purpose of distributing to the generalpublic and is of a nominal value.

Based on the facts provided and the above law, hospitality, where the expenditure is madeto, or on behalf of, the Birmingham Zoo or any other organization to which a federal income taxdeduction is permitted under Section 170 of the Internal Revenue Code of 1986, or anycharitable, education or eleemosynary cause of Section 501 of Title 26 of the U.S. Code, does nothave to be reported under the reporting requirements of Section 36-25-1(31)(b)(3); provided, thatthe public official or public employee does not receive any direct financial benefit, and theexpenditure is legitimately made to, or on behalf of, the charitable organization.

"Dinner mementos" in the form of paperweights with the Zoo logo, or other similaritems, may be accepted by public officials/public employees; provided, that the "dinnermemento" is a promotional item created expressly for the purpose of distributing to the generalpublic and is of a nominal value.

Mr. William R. FosterAdvisory Opinion No. 2007-22Page eight

CONCLUSION

Hospitality, where the expenditure is made to, or on behalf of, the Birmingham Zoo orany other organization to which a federal income tax deduction is permitted under Section 170 ofthe Internal Revenue Code of 1986, or any charitable, education or eleemosynary cause ofSection 501 of Title 26 of the U.S. Code, does not have to be reported under the reportingrequirements of Section 36-25-1(31)(b)(3); provided, that the public official or public employeedoes not receive any direct financial benefit, and the expenditure is legitimately made to, or onbehalf of, the charitable organization.

"Dinner mementos" in the form of paperweights with the Zoo logo, or other similaritems, may be accepted by public officials/public employees; provided, that the "dinnermemento" is a promotional item created expressly for the purpose of distributing to the generalpublic and is of a nominal value.

AUTHORITY

By 4-0 vote of the Alabama Ethics Commissio

H. Cooper, Esq.C?,air

abama Ethics Commission