To more easily determine whether an expenditure is a lawful purpose, the 26 categories of lawful purposes are each assigned a code based on the corresponding section of MN Statute 349.12 Subd. 25(a).
This one-page Lawful Purpose Codes Summary PDF chart is a brief summary of the lawful purpose expenditures that are allowed, and their assigned codes. This chart can be printed out and is useful as a quick reference when filing monthly reports and when talking about lawful purposes in general terms. HOWEVER, there are many exceptions, restrictions, and requirements that are NOT INCLUDED in the summary.
The same information in the Lawful Purpose Codes Summary PDF is listed below. But again, it's only a summary. Before making an expenditure that you believe qualifies as a lawful purpose, it's important to read the full description in the applicable section (Codes 1 through 6, 7 through 12,13 through 19, and 20 through 26)
If you are unsure whether the expenditure qualifies, we strongly recommend that you ask your Compliance Specialist before making the expenditure. (Sometimes people will refer to the LPE code as the "A-Code" ("A1, A2, A3, etc.). This is a holdover from a time when there were A-Codes and B-Codes located in MN Statute 349.12 Subd. 25(b). However, the statute has since been rearranged so that all lawful purpose expenditures are now in one section.)
CODE - DESCRIPTION
1 - To and by 501(c)(3) organizations or 501(c)(4) festival organizations.
2 - Relieving the effects of poverty, homelessness, or disability.
3 - Program for education, prevention, or treatment of problem gambling.
4 - Funding a public or private nonprofit education institution registered with or accredited by Minnesota or any other state.
5 - Scholarships.
6 - Recognition of military service. Active military personnel in need.
7 - Activities and facilities benefiting youth under age 21.
8 - Payment of local, state, and federal taxes on receipts from lawful gambling. For statistical purposes, code 8 is divided into four subcodes:
9 - Real estate taxes and assessments on gambling premises owned by a licensed organization (includes veterans' organizations), or wholly leased by a licensed 501(c)(19) veterans' organization.
10 - Contributions to the United States, state of Minnesota, or any of its subdivisions or agencies or instrumentalities (except a direct contribution to a law enforcement or prosecutorial agency). A fund administered and regulated by a city or county ("10% Fund"). For statistical purposes, code 10 is divided into three subcodes:
11 - To and by a nonprofit organization which is a church or a body of communicants.
12 - Water quality testing for public waters, provided that the MPCA has approved the project.
13 - With DNR approval: 1) Wildlife management project that benefits the public; 2) Costs related to grooming and maintaining snowmobile or ATV trails that are grant-in-aid trails, or other trails open to public use; 3) Supplies and materials for safety training and education programs coordinated by the DNR.
14 - Conducting nutritional programs, food shelves, and congregate dining programs primarily for persons who are age 62 or older or disabled.
15 - To community arts organizations or expenditures to fund arts programs in the community.
16 - Utility costs (fuel for heating, water, electricity, and sewer costs) for building wholly owned or wholly leased by licensed veteran or fraternal organizations and used as their primary headquarters (if portion leased out, percentage for primary headquarters allowed with Gambling Control Board director approval).
17 - Meals and other membership events of licensed veterans' organizations, limited to members and spouses only, held in recognition of military service (limit $5,000 per year for all organizations at post home).
18 - Fees paid to the state for organization license, premises permits, and gambling manager license.
19 - Recognizing humanitarian service demonstrated through volunteerism or philanthropy.
20 - Contribution to another licensed organization, with Board approval.
21 - Contribution to a parent organization that has received prior Board approval.
22 - Repair, maintenance, or improvement of owned real property and capital assets, or replacement of owned capital asset that is no longer repairable, subject to annual limit.
23 - Acquisition or improvement of capital assets (excluding real property) used exclusively for lawful purpose, with a cost greater than $2,000, with Board approval.
24 - Acquisition, erection, improvement, or expansion of real property used exclusively for lawful purpose, with Board approval.
25 - Erection or acquisition of comparable building to replace building destroyed or made uninhabitable due to fire or catastrophe, or taken or sold under eminent domain proceeding, with Board approval.
26 - Contribution to non-licensed 501(c)(19) organization that is not affiliated with contributing organization and whose owned or leased property is not a permitted premises.