Private Nonprofits, Public Funding: What Disclosure Is Required?


January 31, 2013; Source: Austin American-Statesman

When does government money make a nonprofit service provider no longer quite a nonprofit? How much money does it take before a nonprofit agency is all but an arm or outpost of government? Does the receipt of government funding imply that a nonprofit contractor or grant recipient ought to have some extra duties regarding transparency and public access?

In Travis County, Texas, home to the state capital of Austin, Central Health (a public agency) and Seton Healthcare Family (a private nonprofit) are combining forces to operate the Community Care Collaborative, a nonprofit. Central Health is a bit of an odd duck in the health care arena in that it is structured as a political subdivision of the State of Texas, separate from the governments of Travis County or the city of Austin. It levies taxes to pay for providing public health services to Travis County residents, charging property owners 7.8946 cents per $100 of valuation. Its business model reportedly includes contracting with other healthcare providers for services, though it does own the University Medical Center Brackenridge, a trauma center. Seton Healthcare Family is a network of facilities including five major medical centers, three rural hospitals, two community hospitals, and other venues, making it the largest community service organization in Central Texas.

The Collaborative is meant to provide an integrated system of healthcare delivery for people at or below 200 percent of the federal poverty level. The Collaborative would receive substantial resources through Medicaid predicated on its ability to achieve “cooperation, cost efficiency and better patient outcomes,” in the words of the Texas Tribune’s Becca Aaronson.

In what might be considered a misstep coming out of the gate, the Collaborative announced that the Travis County attorney had issued an opinion that because the Collaborative would be a nonprofit (unlike Central Health), it would not need to open board meetings to the public. Perhaps sensing the problem, Central Health’s president and CEO, Patricia Young Brown, immediately pledged to commit the new collaborative to “maximum transparency without impeding [its] operations.” Even without having any bylaws or a master agreement on how it will operate, the board of the collaborative immediately proposed to make six meetings a year open to the public.

How many meetings will the board of the collaborative have in toto? It isn’t known. The American-Statesman suggests that the collaborative could have as many as one a week in its early stages. In any case, because the collaborative is legally not obligated to hold any open meetings, there doesn’t seem to be any requirement regarding the content of the open meetings versus closed meetings, though Central Health’s Young Brown said that the budget would be set at a public meeting and the Collaborative, 51 percent controlled by Central Health, would follow the open records law.

The merger of two health systems, one of which was entirely public, opened up the issue of public access to the Collaborative’s deliberations. But the broader questions is this: when does a nonprofit, due to its receipt of public funds, merit being treated more like a governmental entity under a state’s public meetings and open records laws? Is there a tipping point? Is it a judgment call based on the politics of the situation, or should nonprofits always project their nonprofit identities against potential subjugation to governmental disclosure requirements?—Rick Cohen