FAR Commends Kansas Legislature on Donor Intent Bill
June 14, 2023 | Rebecca Richards
Despite philanthropy’s prominent role in American tradition, charitable agreements exist in a murky area of the law. Recent legislation in Kansas changes that, at least for endowment gifts. On April 19, Governor Laura Kelly signed the Donor Intent Protection Act into law, with overwhelming bipartisan support in both houses.
The law allows donors to seek legal recourse if a charity breaks or ignores the terms of a donor’s gift agreement. When a donor makes a large gift to a charitable organization, both parties typically sign a gift agreement that states explicit terms for the donation and its use. The restrictions can be simple, such as, “These funds will support the University of Oz’s annual fund,” or more specific, like, “This gift endows 12 annual scholarships for cowardly lions.” However, because gifts are considered public, most states recognize only the attorney general as having the legal standing to enforce the terms.
The Donor Intent Protection Act is historic because it empowers donors to enforce the terms of their gift agreements, rather than relying solely on busy state attorneys general. The bill streamlines the appeals process and allows individuals, or their legal representatives, to file a complaint within two years of discovering a violation but not more than 40 years after the endowment agreement’s start date. No other state statute in the country offers donors such clear legal guardrails to protect their endowment gifts.
The new law expressly forbids charitable organizations from violating donor-imposed endowment restrictions. It also keeps funds in the charitable sector, ensuring that money already earmarked for charity continues to serve the public good and cannot be reimbursed to donors. If a court finds that a charity violated a gift agreement, it can rule that the charity return to compliance, implement accounting practices, restore the value of the endowment fund, or transfer the gift to another charity of the donor’s choosing.
FAR congratulates the Kansas Legislature for its national leadership in protecting donor intent and for developing a sensible bill that garnered bipartisan support. We hope that, like Dorothy, this legislation does not just stay in Kansas.
If you plan to give to a college or university, FAR can help you protect your intent and be confident that your gift will make a difference.