"Either would be considered improper, if not illegal," he said.
Stephen J. Kelin, an expert in nonprofit tax law based in Bethesda, agreed that the city agency might have spent the money inappropriately, but he said the legal issue is open to debate because inaugural events that benefit an elected official also can have "educational or cultural or other purposes."
"Does this smell more political than it does charitable?" he asked. "Yes."
In 1997, the inaugural committee of New Jersey Gov. Christine Todd Whitman scrapped plans to pay for inaugural events through nonprofit charities after the IRS warned that the groups could lose their nonprofit status if they helped pay for events that included a day of skiing and several concerts.
The IRS also has ruled that a contribution to a presidential inaugural committee, which sponsors events both open to the public and by invitation only, is not deductible as a charitable contribution.
Under the heading "indirect political contributions," an IRS document says donors cannot deduct business expenses, including "admission to an inaugural ball, gala, parade, concern or similar event if identified with a political party or candidate."
Ivey said the City Foundation has avoided politics over the years.
"No administration has ever attempted to impact the foundation; what they do is impact their own agencies. We don't do anything special for the mayor or anybody," he said.
Dixon, like previous mayors, is a nonvoting member of the foundation board. She declined to be interviewed for this article, saying through a spokesman that she considered herself "disengaged" from the foundation.
Her direct contact with the foundation, however, dates to at least December 2000, when she was City Council president. The foundation's board set up an account at her request to accept donations for an "innovation in education" fund.
Dixon used $3,000 from the foundation in October 2008 to help pay for the education costs of the son of former City Councilman Kenneth N. Harris Sr., who was gunned down last year. In June, Dixon was among the members of the Board of Estimates who voted to approve giving the foundation $48,000 for the Mayoral Fellow Program, to pay college students to work in city government.
Dixon's spokesman said that if an inaugural event such as Winter Wonderland was free and open to the public, the mayor was justified in using foundation money because she believed that the events benefited the community.
