THF, ATTORNEY GENERAL 

OF TEXAS 

Honorable Robert E. Johnson Opinion No. M-1243 

Executive Director 

Texas Legislative Council Re: Upon return to the Ford 

P. 0. Box 12128, Capitol Station Foundation of the unexAustin, Texas 78711 pended balance of a grant 

should the interest earned 

on the deposits be returned 

with the principal or retained by the grantee, the 

Dear Mr. Johnson: Texas Legislative Council? 

In your recent opinion request, you provided us with 

the following information: 

“In 1964 the Legislative Council received 

a grant of $88,000 from the Ford Foundation for 

partial support of a legislative intern program. 

The program is now terminated and the Ford Foundation has asked for a refund of the unexpended 

balance of the grant. 

“The balance in the internship account at 

this time is $10,183.21, consisting of $7,621.02 

remainder of the original grant and $2,562.29 

earned interest on deposits. 

“It is our intent to refund the grant balance 

to the foundation. Our question is, should the 

full amount of $10,183.21 be forwarded to the 

Ford Foundation or should the interest earned on 

deposits be considered an administrative earning 

and retained by the Council? If so, would it be 

proper to deposit the interest earned to the General 

Revenue Fund?” 

According to Black’s Law Dictionary, “grant” means “to 

bestow; to confer; upon someone other than the person or entity 

which makes the grant.” 

Under the terms of the Ford Foundation’s grant to the 

Texas Legislative Council “grant funds will be returned to the 

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Hon. Robert E. Johnson, page 2 (M-1243) 

Foundation if these funds are not expended or committed for the 

purposes of the grant and within the period stated.” 

We view this grant as a gift which could have been expended in its entirety during the five-year period of the grant. 

The funds were given to the Legislative Council for the use and 

benefit of the Council in its legislative internship program 

and were deposited to the Council in a private account in a local 

bank. We do not find that this grant created a trust or that the 

Council acted as trustees of these funds, but rather the Council 

was the beneficiary of the grant and the interest derived from 

time deposits became the property of the beneficiary and did not, 

as in a trust, accrue to the principal. 

Return of the unexpended grant funds plus interest 

earned on the funds is more than is required by the terms of the 

grant. Return of the unexpended funds and interest could be 

looked upon as an “investment” which is prohibited in grants 

of this type because such grants must be made for “charitable” 

purposes under the Tax Reform Act of 1969. Therefore we hold 

that only the unexpended balance of the grant funds, without the 

interest, should be returned to the Ford Foundation. 

Article 2543d, Section 1, Vernon’s Civil Statutes, 

provides : 

“Section 1. Interest received on account of 

time deposits of moneys in funds and accounts in 

the charge of the State Treasurer shall be allocated 

as follows: To each constitutional fund there shall 

be credited the pro rata portion of the interest 

received due to such fund. The remainder of the 

interest received, with the exception of that portion 

required by other statutes to be credited on a pro 

rata basis to protested tax payments, shall be 

credited to the General Revenue Fund. The interest 

received shall be allocated on a monthly basis.” 

We are of the opinion that the interest earned on the 

grant funds should be deposited to the credit of the General Revenue 

Fund because the interest actually belongs to the State, although 

the State Treasurer was onlv constructivelv and not directlv 

“in charge” of the account which earned the interest, under’the 

holding in Boyett v. Calvert, 467 S.W.2d 205, 209 (Tex.Civ.App. 

1971, reh.den.). 

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Hon. Robert E. Johnson, page 3 (M-1243) 

SUMMARY 

The unexpended balance of the Ford Foundation grant must be returned to the Foundation. 

The interest earned on the grant funds must be 

deposited to the General Revenue Fund under 

Article 2543d, Vernon's Civil Statutes. 

Prepared by Linda Neeley 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

James Maxwell 

Jim Swearingen 

Lewis Jones 

Linward Shivers 

SAMUEL D. MCDANIEL 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

eneral of Texas 

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