Previous LSUS Guest Speakers Donation Rejected by City Due to Atheist Beliefs?

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Hemant Mehta, a well-known blogger, author, and previous guest speaker at Lake Shore Unitarian Society, is happy to finally get rid of $3,000. For more than two months, Mehta had been trying to give the money to the community of Morton Grove, Illinois. As he reported in a recent blog post here, he raised the money with help from readers of his blog after a local American Legion post withheld a significant amount of money from the Morton Grove Park District when board Commissioner Dan Ashta wouldn’t stand for the Pledge of Allegiance. 

Instead of accepting the donation, Morton Grove Park officials returned the check. The Chicago Tribune reports that the city cited a desire to avoid a "First Amendment dispute." However, Mehta makes the rebuttal, "...which was weird, since that was precisely what they were doing by accepting money from the American Legion on the condition that everyone stand for the Pledge."

Mehta didn't give up, though. He reached out to the Morton Grove Public Library. However, they too returned the check and declined the donation. Instead of citing First Amendment issues, news outlets are reporting that "..a library board trustee called Mehta's blog, the Friendly Atheist, a 'hate group,' and questioned the legality of accepting a donation originally intended for the park district.

Mehta didn't anticipate that it would be this hard to get rid of $3,000. But third time was a charm for the atheist blogger. More than two months and two failed attempts later, Mehta has found an organization that is happy to take the money. Mehta approached the Niles Township Food Pantry, who says they are grateful for the generous donation. "It's immaterial to me who the individual is making the donation," Niles Township Clerk Charles Levy said. "We should be appreciative of the donation and make sure it is used to the benefit of the people of Niles Township. I'm grateful for the $3,000."

We should be appreciative of the donation and make sure it is used to the benefit of the people of Niles Township. I’m grateful for the $3,000.
— Niles Township Food Pantry

The Niles Township Food Pantry provides support to the Morton Grove community and a few others. 

What do you think about this situation? Were the Morton Grove Park District and/or Morton Grove Public Library correct to worry that a donation from a prominent atheist, and its intersection with popular ideas about the requirements of patriotism, might result in political fallout they preferred to avoid? Or is it more important for organizations to treat donations and donors with neutrality, and accept funds that will benefit the community, regardless of whether board members are offended by the donor's beliefs, or risk of community backlash?