Can Minnesota Cities Accept Donations? What City Officials Should Know

Cities across Minnesota often receive offers from residents, businesses, or community groups that want to support local projects and services through donations. These gifts may include cash contributions, donated land, playground equipment, public art, volunteer labor, or materials for community improvements.

While these offers are often well-intentioned, city officials frequently ask an important question: Can cities legally accept donations?

In many cases, the answer is yes. However, because cities are governmental entities that manage public resources, there are important legal rules that apply.

What is “Public Purpose”?

One of the most important legal principles regarding city spending in Minnesota is “public purpose.”

In simple terms, this means city funds — including donated funds once accepted by the city — must be used in ways that benefit the public as a whole rather than a private individual or organization.

Minnesota courts have generally said a public purpose exists when an expenditure primarily benefits the community, falls within a city’s legal authority, and is not mainly intended to help a private interest.

Because cities are funded by taxpayers, public resources must be used responsibly and fairly.

Can Cities Accept Donations?

Generally, yes. Minnesota law allows cities to accept gifts and donations of money or property for lawful city purposes, as long as the donation is not for a religious or political purpose.

Cities commonly accept donations for:

• Park improvements
• Playground equipment
• Public art or memorials
• Trail projects
• Community centers
• Library enhancements
• Public safety equipment
• Trees, benches, or beautification projects

In many communities, donations help make projects possible that otherwise may not fit within the city budget.

Formal Council Approval Matters

Accepting a donation should not be treated as an informal arrangement. City councils should formally approve donations during a public meeting.

Formal approval helps create a public record, ensure transparency, clarify how the donation will be used, and document any conditions attached to the gift.

If a donor wants funds or property used for a specific purpose, those conditions should be carefully reviewed before acceptance. The League of Minnesota Cities Handbook notes that “a resolution accepting the gift and the donor’s terms must receive an affirmative vote of two-thirds of the members of the council and fully state the donor’s terms.” The handbook also includes a model resolution cities can use when accepting donations.

Once Accepted, Donations Become Public Funds

One of the most misunderstood aspects of donations is that once a city accepts donated funds, those funds generally become public funds.

That means cities must still comply with the same legal requirements that apply to other city money, including:

• Public purpose requirements
• Purchasing and contracting laws
• Financial oversight requirements
• Budgeting and accounting procedures
• Other applicable city policies and state laws

For example, a donor generally cannot require a city to:

• Give money directly to a private individual
• Support political activities or campaigns
• Ignore procurement requirements
• Use public resources primarily for private benefit

Can Cities Ask for Donations or Fundraise?

This is where things can become more complicated.

Minnesota cities do not have broad authority to actively solicit donations or conduct fundraising campaigns in the same way nonprofit organizations often do. There are some limited exceptions under state law. For example:

• Cities may authorize donation solicitation related to National Night Out activities.
• Fire departments and firefighters may participate in certain charitable fundraising activities, such as Fill the Boot campaigns.

Outside of those limited situations, cities should refrain from organizing fundraisers or directly soliciting donations.

Questions to Ask Before Accepting a Donation

Before accepting a donation, city officials should consider several key questions:

• Does the donation serve a public purpose?
• Is the city legally authorized to participate in the activity?
• Are there restrictions attached to the donation?
• Could the donation create future maintenance, staffing, insurance, or operational costs?
• Has the city attorney reviewed the arrangement?

Legal review is especially important for large donations or gifts with conditions attached.

When in Doubt, Ask Questions Early

When questions arise, cities should work closely with their city attorney to evaluate:

• The public purpose involved
• The city’s legal authority
• Donor
• Potential long-term implications

For additional guidance, cities can review the League’s Public Purpose Expenditures resource.