Are non-profits businesses? Pa. court to decide

HARRISBURG - Two years ago, a pair of high-profile cabinet secretaries in Gov. Rendell's administration came under public scrutiny after their departments awarded grants to non-profits that employed their spouses.

Today that controversy landed before the state's highest court, which is being asked to decide whether non-profit entities should be covered by conflict-of-interest provisions in the state's ethics law.

The case pits Gov. Rendell against the state Ethics Commission, which in 2007 ruled that former secretaries Kathleen McGinty and Mike DiBerardinis would have a conflict of interest if they continued giving grants to non-profits that employed their spouses.

At the time, the commission recommended that Rendell appoint surrogates for the secretaries when their agencies considered grants to such organizations.

The case first went to Commonwealth Court, where a panel of judges disagreed with the Ethics Commission, and was later appealed to the Supreme Court.

John J. Contino, the Ethics Commission's executive director, said today that if non-profits are not covered by the state's ethics act, "it would create a potential loophole" in the law.

That law generally prohibits state workers from using their positions to enrich themselves, their families or their businesses.

At issue before the court now is whether a non-profit can - and should be - included under the business definition.

Ralph G. Wellington, who was representing the administration today, argued that non-profits do not constitute a business, and that it is not the court's but the legislature's job to change the law if lawmakers believe that certain non-profits should be included.

"The law is what it is," he said.

The House of Representatives, at least, has taken the position in the past that extending conflict-of-interest provisions to non-profits (such as fire departments) would make public officials less likely to volunteer their time to them.

The justices did not rule on the matter today, and it is unclear when they will.

McGinty was the head of the Department of Environmental Protection (DEP) until last year. DiBerardinis led the Department of Conservation and Natural Resources (DCNR) until earlier this year.

In 2007, the Philadelphia Daily News first disclosed that McGinty's husband worked as a consultant for the Pennsylvania Environmental Council and its subsidiary, Enterprising Environmental Solutions Inc. Both groups had received several million dollars in grants from the DEP since 2003, when Rendell became governor, to support agricultural conservation, watershed protection and abandoned mine cleanups.

It was also disclosed that DiBerardinis' wife runs the parks program of the Pennsylvania Horticultural Society, which had also received grants from DCNR.