TITLE:  African Development Foundation: Retention of Funds from Strategic, B-300218, March 17, 2003
BNUMBER:  B-300218
DATE:  March 17, 2003
**********************************************************************
African Development Foundation: Retention of Funds from Strategic, B-300218,
March 17, 2003

   Decision
    
    
Matter of:   African Development Foundation: Retention of Funds from
Strategic Partnership Agreements with Certain African Governments
    
File:            B-300218
    
Date:           March 17, 2003
    

    

   DIGEST
    
1.  Under its gift acceptance authority, the African Development
Foundation (ADF) may retain funds it receives from the governments of
Botswana, Namibia and the State of Jigawa, Nigeria that supplement amounts
that ADF grants to its recipients.
    
2.  ADF does not have statutory authority to contract with the government
of Guinea to provide services on behalf of Guinea to certain development
sites selected by Guinea but who are not ADF grantees.
    
DECISION
    
The President of the African Development Foundation (ADF) has requested an
advance decision under 31 U.S.C. S: 3529 regarding the authority of the
Foundation to retain funds it receives from partnerships with four African
governments: Botswana, Namibia, Guinea, and the State of Jigawa, Nigeria. 
We conclude that ADF's gift acceptance authority permits it to accept
funds from Botswana, Namibia and Jigawa State because those governments
donate funds to supplement amounts that ADF grants to recipients within
their respective states.  Unlike the other three partnerships, ADF's
partnership with Guinea involves a contract where Guinea pays ADF for
services.  Since ADF does not have statutory authority to enter into
contracts to provide services, it should terminate its contract with
Guinea and deposit any proceeds from that contract into the general fund
of the Treasury as miscellaneous receipts.  As we discuss below, ADF might
consider restructuring its arrangement with Guinea along the same lines as
its arrangements with Botswana, Namibia and Jigawa.
    
BACKGROUND
    
The African Development Foundation (ADF) is a U.S. government corporation
that supports community-based, self-help initiatives to alleviate poverty
and promote broad-based, sustainable development in Africa.  Specifically,
ADF supports new export trade and investment activities, improved natural
resource management, and AIDS prevention and mitigation through direct
grants to small and micro-enterprises and community-based organizations
that generate income and employment for low-income people.  In recent
years ADF has helped beneficiaries leverage grants, loans and loan
guarantees from other sources through what ADF terms *strategic
partnerships* with national and state governments in Africa, national and
regional development banks, other international development assistance
agencies, and the private sector.  See, e.g. Foreign Operations, Export
Financing, and Related Programs Appropriations, Hearings Before the
Subcomm. On Appropriations, Part 1A Justification of Budget Estimates
107th Cong. 1219 et seq. (March 2002) (African Development Foundation,
Congressional Budget Justification, Fiscal Year 2003);  see generally
www.adf.gov.
    
ADF has undertaken four such strategic partnerships with Botswana,
Namibia, Guinea, and the State of Jigawa, Nigeria.  ADF has signed
multi-year Memoranda of Understanding (MOU) with these governments,
whereby they agree to share the costs of ADF development programs in their
respective states.  Under the terms of the MOU with Botswana, Namibia and
Jigawa State, these governments make quarterly contributions to ADF for
50% of the amount of grants that ADF has awarded in their respective
countries that meet certain agreed-upon criteria set out in the MOU. 
According to ADF, these partnerships enable ADF to *leverage resources for
grassroots development, promote the use of participatory development
methodology in development strategies, and facilitate coordination with
others involved in development assistance.*  Mem. to Nathaniel Fields,
Pres., ADF, from Doris Martin, Gen. Counsel, ADF, Sept. 9, 2002 at 2.
    
The partnership with the government of Guinea operates differently.  Here
the National Directorate of Decentralization, an arm of the government of
Guinea, has contracted with ADF, and pays ADF, to furnish technical
assistance as a *field operator* to rural communities that participate in
Guinea's *Village Community Support Program,* which is not an ADF
program.  Though ADF ordinarily provides technical assistance to ADF
grantees, here the government of Guinea is contracting with ADF and paying
it to provide services to communities which are not participating in an
ADF program.
    
DISCUSSION
    
The question before us is whether ADF may retain funds received from these
four partnerships.  The Miscellaneous Receipts Statute, 31 U.S.C. S:
3302(b), requires federal agencies[1] to deposit moneys received for the
use of the United States into the general fund of the Treasury as
miscellaneous receipts, unless the agency has express statutory authority
to retain moneys it collects.  B-281064, Feb. 14, 2000.  Even where those
moneys might relate in some way to the agency's programs, the agency must
have express authority to retain moneys collected.  See, e.g. 40 Comp.
Gen. 356, 359 (1960).  We consider the question, then, whether ADF has
express statutory authority to retain such funds.
    
Partnerships with Botswana, Namibia and Jigawa State, Nigeria
    
Among its corporate powers, ADF *may accept gifts or donations of services
or of property (real, personal or mixed), tangible or intangible, in
furtherance of its purposes.*  22 U.S.C. S: 290h-4(a)(9).  Those purposes
are to support self-help activities at the local level designed to enlarge
opportunities for community development, to stimulate and assist effective
and expanding participation of Africans in their development process, and
to encourage the establishment and growth of development institutions
which are indigenous.  22 U.S.C. S: 290h-2(a).  We conclude that the funds
ADF receives from Botswana, Namibia and Jigawa State constitute gifts or
donations of personal property.  The strategic partnerships between ADF
and these governments are analogous to a situation we considered in 1980. 
    
In B-195492, March 18, 1980, we concluded that moneys collected by the
National Park Service from cooperating associations were gifts and
therefore properly retained in its trust fund under its gift acceptance
authority.  The Secretary of the Interior had authority under 16 U.S.C. S:
6 (1976) to accept lands, rights-of-way, buildings or other property and
money which may be donated for the purposes of the National Park and
Monument System.  Fifty-nine non-profit organizations had agreements with
the Park Service to sell various interpretive publications and souvenirs
throughout the national parks, and regularly contributed a small
percentage of their sales to the Secretary's Park Service trust fund.  We
stated that a gift is a gratuitous conveyance or transfer of ownership in
property without any consideration.  Because the cooperating associations
had the option of not contributing to the Park Service trust fund, we
concluded that their contributions were voluntary and did not constitute
consideration for the privilege of conducting business in the national
parks, and therefore were properly credited to the Park Service's trust
fund as gifts.
    
Like the associations cooperating with the Park Service, Botswana, Namibia
and Jigawa State contribute voluntarily to ADF.  In fact, ADF and the
cooperating government are free to withdraw from the MOU at anytime.[2] 
ADF does not offer the cooperating government any consideration for its
contribution.  ADF has a statutory mandate and receives yearly
appropriations to award development grants throughout Africa, and it would
continue to do so without the financial participation of these African
governments.  Consistent with 22 U.S.C. S: 290h-4(a)(9), the cooperating
governments' funds plainly further ADF's purposes *to enlarge
opportunities for community development; to stimulate and assist effective
and expanding participation of Africans in their development process; and
to encourage the establishment and growth of development institutions
which are indigenous.*  Therefore, under its gift acceptance authority,
ADF may retain the funds it receives from its partnerships with the
governments of Botswana, Namibia and Jigawa State.[3]

       

      Partnership with Guinea

    
Unlike its agreements with the other three governments, ADF has entered
into a contract with Guinea to provide services that Guinea pays for. 
Though ADF ordinarily provides technical assistance to ADF grantees, here
the government of Guinea is contracting with ADF and paying it to provide
technical assistance services to communities which are not participating
in an ADF program.  We have found no authority permitting ADF to engage in
such transactions;[4] ADF, therefore, may not retain amounts paid by
Guinea.
    
It is fundamental that federal agencies cannot make use of appropriated
funds to manufacture products or materials for, or otherwise supply
services to, other parties, in absence of specific authority therefore. 
62 Comp. Gen. 323 (1983); 31 Comp. Gen. 624 (1952).  While ADF has
authority under 22 U.S.C. S: 290h-4(1)(5) to enter into contracts[5] as
necessary for carrying out its functions, those functions are to *make
grants, loans and loan guarantees to any African private or public group,*
22 U.S.C.   S: 290h-3(a)(1).  We understand this section to authorize ADF
to enter into procurement and similar contracts necessary to carry on its
day-to-day operations, not to provide services to a foreign government on
a reimbursable basis.[6]  Without authority for the contract, ADF should
terminate the contract.  To the extent that ADF has received funds from
the government of Guinea, it should deposit those in the Treasury as
miscellaneous receipts.
    
ADF might consider restructuring its arrangement with Guinea along the
same lines as its arrangements with Botswana, Namibia and Jigawa.  As we
explained earlier, ADF has authority to accept gifts, and could accept a
gift of funds from Guinea.  If ADF were to determine that the development
sites in Guinea satisfy the eligibility and other criteria that ADF
imposes on applicants for ADF grants, it could award grants to them under
its statutory authority.  Guinea, rather than contracting with ADF for the
delivery of services to these development sites, could make a gift of
funds to ADF which ADF could use to defray the costs of the grants.  It is
for ADF to determine, however, that awarding grants to these sites is the
best use of the funds and that such grants would further ADF's statutory
mission.
    
CONCLUSION
    
We conclude that ADF's gift acceptance authority permits it to accept
funds from Botswana, Namibia and the State of Jigawa, Nigeria because
those governments donate funds to supplement amounts that ADF grants to
recipients within their respective states.  Although ADF could accept a
gift of funds from the government of Guinea, ADF does not have statutory
authority to enter into a contract to provide services to the government
of Guinea.  ADF should terminate this contract and deposit any proceeds
therefrom into the general fund of the Treasury as miscellaneous receipts.
    
    
/signed/
    
Anthony Gamboa
General Counsel
    

   ------------------------

   [1] As a wholly owned government corporation, ADF is subject to the
Miscellaneous Receipts Statute.  See 52 Comp. Gen. 54 (1972); 5 Comp. Gen.
1004 (1926). 
[2] ADF does not view the MOUs as legally binding documents.  Mem. to
Nathaniel Fields, supra at 3.  Indeed, the terms of the MOU specify that
either party may simply withdraw from the MOU by giving ADF thirty days
written notice.  Art. 3, S: 3-10B, Mem. Of Understanding between the Gov't
of Bots. and the ADF, Aug. 1997.  See also Sec. 3.2 (MOU is not intended
to effect an obligation of funds by ADF).
[3] We note that in its submission, ADF states that when it awards a
matched grant to recipients, *ADF records 50 percent of the grant award in
its general ledger.*  Mem. to Nathaniel Fields, supra at 2.  This would
suggest that, in anticipation of matching funds from the cooperating
government, ADF records only 50% of its total grant obligation.  An ADF
official advised us that when ADF awards a grant, even though a
cooperating government indicates that it will supply 50% of the amount,
ADF incurs an obligation for the full grant amount, not just 50% of that
amount.  If ADF's statement does indeed mean that it records only 50% of
its grant obligation, we advise ADF that this would constitute
underrecording of its full obligation to the grantee in violation of 31
U.S.C. S: 1501.
[4] ADF, itself, identifies no such authority.
[5] 22 U.S.C. S: 290h-4(1)(5) (2003) reads, *The Foundation, as a
corporation -- may make and perform contracts and other agreements with
any individual, corporation, or other private or public entity however
designated and wherever situated, as may be necessary for carrying out the
functions of the Foundation.*
[6] Even if ADF were to have such specific statutory authority to provide
services, any proceeds generated from services contracts would have to be
deposited as miscellaneous receipts.  See, e.g. 15 Comp. Dec. 178 (1908).