Senate Substitute for HOUSE BILL No. 2170
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 and maintains its
principal office in Kansas.
(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.
(d) "Endowment agreement" means a written 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 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, 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) "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 living, named individual
designated in an endowment agreement to act in place of a party to an
endowment agreement with respect to all matters expressed in such
endowment agreement and all actions that such agreement
contemplates, including, but not limited to, interpreting, performing
and enforcing any provisions of such endowment agreement and
defending the validity thereof.
(g) "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, including, but not limited to, K.S.A. 58-3616, and
amendments thereto, no charitable organization that accepts a
contribution of property of an endowment fund or to an endowment
fund pursuant to an endowment agreement that imposes 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, the donor, or the Senate Substitute HOUSE BILL No. 2170—page 2
donor's legal representative, may file a complaint within two years after
discovery of the violation for breach of such agreement but not more
than 40 years after the date of the endowment agreement that
established the endowment fund. The complaint may be filed in a court
of general jurisdiction in the county of this state 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, or result in, 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 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; or
(G) transfer of property from the endowment fund to another
charitable organization as directed by the donor, but only if the transfer
would not jeopardize or be inconsistent with the tax-exempt status of
the original charitable organization. Nothing in this section shall
conflict with or affect section 3(b), and amendments thereto.
(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 as provided in K.S.A. 58-3616, and amendments thereto. 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. Nothing
in this act affects the authority of the attorney general to enforce any
restriction in an endowment agreement, limits the application of the
judicial power of cy pres or alters the right of an institution to modify a
restriction on the management, investment, purpose or use of an
endowment fund in a manner permitted by the endowment agreement. Senate Substitute HOUSE BILL No. 2170—page 3
Sec. 6. This act shall take effect and be in force from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the
HOUSE, and was adopted by that body
HOUSE adopted
Conference Committee Report
Speaker of the House.
Chief Clerk of the House.
Passed the SENATE
as amended
SENATE adopted
Conference Committee Report
President of the Senate.
Secretary of the Senate.
APPROVED
Governor.