Session of 2023
Senate Substitute for HOUSE BILL No. 2170
By Committee on Federal and State Affairs
3-24
AN ACT concerning philanthropic gifts; relating to judicial enforcement
of donor-imposed restrictions on gifts of endowment funds or to
endowment funds; enacting the donor intent protection act.
Be it enacted by the Legislature of the State of Kansas:
Section 1. (a) Sections 1 through 5, and amendments thereto, shall be
known and may be cited as the donor intent protection act.
(b) The purpose of sections 1 through 5, and amendments thereto, is
to provide legal recourse to an individual charitable donor when the
donor's gift restrictions pursuant to an endowment agreement with a
recipient charitable organization that governs an endowment fund
containing only property gifted by such donor are not followed by the
recipient charitable organization.
Sec. 2. For purposes of sections 1 through 5, and amendments
thereto:
(a) "Charitable organization" means an organization organized and
operated exclusively for religious, charitable, scientific, testing for public
safety, literary, educational or other specified purposes and that is exempt
from federal income taxation as an entity described in section 501(c)(3) of
the federal internal revenue code.
(b) "Donor" means an individual who has made a gift of property to
an existing endowment fund of a charitable organization or that establishes
a new endowment fund of the charitable organization pursuant to terms of
an endowment agreement that may include donor-imposed restrictions or
conditions governing the use of the gifted endowment property or funds.
(c) "Donor-imposed restriction" means a written statement within an
endowment agreement or institutional solicitation that specifies obligations
on the management or purpose of the property gifted by the donor that are
imposed by or accepted by the donor of the gift as a condition of the
charitable organization's receipt of property pursuant to an endowment
agreement or institutional solicitation.
(d) "Endowment agreement" means an agreement between a donor
and a charitable organization that gifts an endowment fund to a charitable
organization or gifts property to an endowment fund of a charitable
organization, and such donor is the only donor gifting such endowment
fund or property to an endowment fund. An "endowment agreement" may
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include donor-imposed restrictions or conditions governing the use of the
gifted endowment property or fund.
(e) "Endowment fund" means an institutional fund that, under the
terms of an endowment agreement or institutional solicitation, is not
wholly expendable by the charitable institution on a current basis and that
only contains property gifted by a single donor. "Endowment fund" does
not include assets that the charitable institution designates as an
endowment fund for its own use.
(f) "Institutional solicitation" means a record or records, including a
solicitation for endowment funding by a charitable organization, under
which property is granted to, transferred to or held by a charitable
institution as an endowment fund. An "institutional solicitation" may
constitute or include an endowment agreement between the donor and the
charitable institution.
(g) "Legal representative" means the administrator or executor of an
individual's estate, a surviving spouse if there is a judicial settlement of the
accounts of an individual's estate or any individual designated in an
endowment agreement, whether such individual was born at the time of
such designation, to act in place of a party to an endowment agreement
with respect to all matters expressed in such agreement and all actions that
such agreement contemplates, including, but not limited to, interpreting,
performing and enforcing any provisions of such agreement and defending
the validity thereof.
(h) "Property" means real property, personal property or money,
cryptocurrency, stocks, bonds or any other asset or financial instrument.
Sec. 3. (a) Except where specifically required or authorized by federal
or state law, no charitable organization that accepts a contribution of
property of an endowment fund or to an endowment fund pursuant to a
written donor-imposed restriction shall violate the terms of that restriction.
(b) If a charitable organization violates a donor-imposed restriction
contained in an endowment agreement or institutional solicitation, the
donor, or the donor's legal representative, may file a complaint within two
years after discovery of the violation for breach of such agreement. The
complaint may be filed in a court of general jurisdiction in the county
where a charitable organization named as a party has its principal office or
principal place of carrying out its charitable purpose or in the county of
residence of the donor. The complaint may be filed whether or not the
endowment agreement expressly reserves a right to sue or a right of
enforcement. A complaint filed pursuant to sections 1 through 4, and
amendments thereto, shall not seek a judgment awarding damages to the
plaintiff.
(c) (1) If the court determines that a charitable organization violated a
donor-imposed restriction, the court may order any remedy in law or
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equity that is consistent with and restores, to the extent possible, the
donor's intent as expressed by the donor-imposed restrictions and
conditions in the endowment agreement, including, but not limited to:
(A) Future compliance with or performance of donor-imposed
restrictions or conditions on the use or expenditure of the gifted
endowment property;
(B) restitution or restoration by the charitable organization of
property to an endowment fund that has been expended or used by the
charitable organization in contravention of donor-imposed restrictions;
(C) an accounting or the imposition of accounting requirements;
(D) restoration or a change to a name required by the donor-imposed
restrictions;
(E) measures to preserve the property and value of the endowment
fund;
(F) modification or release of a donor-imposed restriction or
reformation or dissolution of the endowment agreement as permitted by
Kansas law;
(G) transfer of property from the endowment fund to another
charitable organization as directed by the donor; or
(H) any other remedy available under contract law or equity
consistent with the charitable purposes expressed in the endowment
agreement and with the charitable purpose of the charitable organization.
(2) The court shall not order the return of donated funds to the donor
or the donor's legal representative or estate.
Sec. 4. A charitable organization may obtain a judicial declaration of
rights and duties expressed in an endowment agreement containing donor-
imposed restrictions as to all of the actions that such agreement
contemplates, including, but not limited to, the interpretation, performance
and enforcement of the agreement and determination of its validity. The
charitable organization may also seek such declaration in any suit brought
under this section.
Sec. 5. The provisions of sections 1 through 4, and amendments
thereto, shall not apply to any release or modification of any donor
restriction or purpose ordered or made pursuant to K.S.A. 58-3616, and
amendments thereto, prior to July 1, 2023, or to any appeal of any such
release or modification that is pending on or after July 1, 2023.
Sec. 6. This act shall take effect and be in force from and after its
publication in the statute book.
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