SESSION OF 2023
SUPPLEMENTAL NOTE ON SENATE SUBSTITUTE FOR
HOUSE BILL NO. 2170
As Recommended by Senate Committee on
Federal and State Affairs
Brief*
Senate Sub. for HB 2170 would create the Donor Intent
Protection Act, which would provide legal recourse to an
individual charitable donor when the donor’s gift restrictions
are not followed by the recipient charitable organization.
Purpose (Section 1)
The bill would state that its purpose is to provide legal
recourse to an individual charitable donor. The bill would state
recourse is available when pursuant to an endowment
agreement, the donor’s gift restrictions are not followed.
The bill would further require the recipient be a
charitable organization governing an endowment fund that
must contain only property gifted by that single, individual
donor.
Definitions (Section 2)
The bill would define terms as follows:
●“Charitable organization” would mean an
organization organized and operated exclusively
for religious, charitable, scientific, testing for public
safety, literary, educational, or other specified
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org purposes that is exempt from federal income
taxation as a 501(c)(3) entity under the Federal
Internal Revenue Code;
●“Donor” would mean 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;
●“Donor-imposed restriction” would mean 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 of the gift as a condition of the
charitable organization’s receipt of property
pursuant to an endowment agreement or
institutional solicitation;
●“Endowment agreement” would mean 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
the donor is the only donor gifting such endowment
fund or gifting property to such endowment fund;
○An “endowment agreement” may include
donor-imposed restrictions or conditions
governing the use of the gifted endowment
property or fund;
●“Endowment fund” would mean 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.
2- 2170 ○“Endowment fund” would not include assets
that the charitable institution designates as an
endowment fund for its own use and would
only include those endowment funds
containing only property gifted by a single
donor;
●“Institutional solicitation” would mean 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;
●“Legal representative” would mean the
administrator or executor of a person’s estate; a
supervising spouse if a court judgment has settled
the accounts of the estate; or a person designated
in an endowment agreement, whether or not born
at the time of such designation, to act in place of a
party to the agreement for all matters expressed in
the agreement and all of the actions it
contemplates, including, but not limited to,
interpreting, performing, and enforcing the
agreement and defending its validity; and
●“Property” would mean real or personal property or
money, cryptocurrency, stocks, bonds, or any other
asset or financial instrument.
Violations of Donor-Imposed Restriction and Recourse
(Section 3)
Except when specifically required or authorized by
federal or state law, the bill would specify that no charitable
organization that accepts a contribution of property of an
endowment fund or to an endowment fund pursuant to a
3- 2170 written donor-imposed restriction could violate the terms of
that restriction.
Under the bill if the donor-imposed restriction is violated,
the donor or the donor’s legal representative could file a
complaint within two years after discovery of the breach of
agreement. The complaint could be filed in a district court of
the county where the charitable organization has its principal
office or place of carrying out its charitable purpose, or in the
county of residence of the donor. The bill would allow the
complaint to be filed whether or not the endowment
agreement expressly reserves a right to sue or right of
enforcement. A complaint filed under the bill would not be
able to seek a judgment awarding damages to the plaintiff.
If a court determines that a charitable organization
violated a donor-imposed restriction, the bill would allow the
court to 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.
Remedies would include, but would not be limited to:
●Future compliance with or performance of donor-
imposed restrictions or conditions on the use or
expenditure of the gifted endowment property;
●Restitution or restoration by the charitable
organization of property to an endowment fund that
have been expended or used by the charitable
organization in contravention of donor-imposed
restrictions;
●An accounting or the imposition of accounting
requirements;
●Restoration or a change to a name required by the
donor-imposed restrictions;
4- 2170 ●Measures to preserve the property and value of the
endowment fund;
●Modification or release of a donor-imposed
restriction or reformation or dissolution of the
endowment agreement as permitted by Kansas
law;
●Transfer of property from the endowment fund to
another charitable organization as directed by the
donor; or
●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.
The bill would not allow for the court to order the return
of donated funds to the donor or the donor’s legal
representative or estate.
Judicial Declaration of Rights and Duties (Section 4)
For an endowment agreement containing donor-
imposed restrictions, the bill would allow a charitable
organization to obtain a judicial declaration of rights and
duties as to all of the actions the endowment agreement
contemplates, including, but not limited to:
●The interpretation, performance, and enforcement
of the agreement; and
●Determination of its validity.
The charitable organization would also be able to seek
such declaration in any suit brought under the bill.
5- 2170 Non-Retroactivity (Section 5)
The bill would state its provisions would not apply to
modifications or releases of donor restrictions or purposes by
a final determination of a court or by an institution after review
by the Attorney General before the effective date of the Act,
or to any pending appeal of such a final determination of a
court or action by an institution.
Background
HB 2170, as passed by the House, would have
amended law concerning samples of products provided to
retailers and to club and drinking establishment licensees.
[Note: These provisions were added into HB 2059 by the
Senate Committee on Federal and State Affairs.]
The Senate Committee removed the contents of HB
2170, inserted the contents of SB 133, as amended by the
Senate Committee, and recommended a substitute bill be
passed. [Note: The provisions of HB 2170 relating to product
samples were not retained in the substitute bill.]
SB 133 (Donor Intent Protection Act)
SB 133 was introduced by the Senate Committee on
Federal and State Affairs at the request of Senator Kloos.
Senate Committee on Federal and State Affairs
In the Senate Committee hearing on SB 133 ,
proponent testimony was provided by two representatives of
Philanthropy Roundtable, who provided examples of
instances in which donor intentions were violated, resulting in
litigation. Proponents expressed that the bill would provide a
legal pathway for the enforcement of written endowment
agreements and increase trust between donors and charities.
6- 2170 Written-only proponent testimony was provided by a
private citizen.
Opponent testimony was provided by a representative
of the Kansas State University Foundation, who expressed
concern that the bill would create confusion and be a drain on
the resources of charitable organizations. The opponent
stated the bill would conflict with current Kansas laws that
protect donor intent.
On March 23, 2023, the Senate Committee amended
SB 133 to:
●Specify that the provisions of the bill apply to a
endowment agreement that is governing an
endowment fund containing only property gifted by
the single, individual donor who sought the
agreement;
●Amend the definition of “endowment agreement” to
specify that the agreement would only apply to the
donor gifting the endowment fund or property to the
endowment fund;
●Amend the definition of “endowment fund” to
specify that an endowment fund would contain only
property gifted by a single donor;
●Add the definition of “legal representative”;
●Change the statute of limitations on filing
complaints after discovery from six years to two
years; and
●Specify that the Act is not retroactive.
The Senate Committee removed the contents of HB
2170 concerning product samples, inserted the amended
contents of SB 133 concerning the Donor Intent Protection
Act, and recommended a substitute bill be passed.
7- 2170 Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on SB 133, as introduced, the Office of Judicial
Administration indicates enactment of the bill could increase
the number of cases filed in district court because the bill’s
provisions would allow for a lawsuit to be filed for violations,
which would increase the time spent by judges an court
employees processing and researching these cases. The
Office estimates enactment of the bill could result in the
collection of docket fees in those cases filed under the bill’s
provisions, which would be credited to the State General
Fund. According to the Office, a fiscal effect cannot be
estimated until the Judicial Branch has had an opportunity to
operate under the bill’s provisions. Any fiscal effect
associated with the bill is not reflected in The FY 2024
Governor’s Budget Report.
Donor Intent Protection Act; philanthropic gifts; donor-imposed restrictions; charitable
organizations; endowment funds
8- 2170