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Fundraising Regulation

What You Need to Know About Endowment Restrictions

How you can use a gift is generally controlled by donor restrictions written into a gift instrument; the instrument can be as simple as an email or a memo line in a check. If there is no restricting language in the gift instrument, the terms of the solicitation (i.e. whatever the charity advertises as the purpose of their solicitation) will govern what you can or cannot do. As to the length of the restriction, any donor restrictions that use the word endowment are considered to create a fund of permanent duration unless other language in the gift instrument limits the duration of the fund.

August 10, 2020 8 Comments

News and Avoiding Scams

IRS Guidance Breathes New Life Into Mission-Related Investing

Foundations are required to expend approximately 5% of their assets for charitable purposes each year. The other 95% is invested to generate distributable income for future years. Historically, foundations have struggled with the idea of making riskier investments that further their charitable purposes, but do not qualify as a PRI because a significant purpose of the investment is the production of income or the appreciation of property.

September 21, 2015 No Comments

Managing Donor Restricted Gifts

Giving donors the power to restrict their gifts for a specific purpose or program or to restrict the timing and amount of expenditures can be a powerful giving incentive. Restrictions give donors comfort that their gift will be used as they envision.

April 14, 2014 No Comments

Grantmaking and Gift Planning

Nonprofit Law Jargon Buster: What is the Cy Pres Doctrine?

From time to time, charities are faced with what to do with a restricted gift when the terms of the donor’s restriction can no longer be fulfilled. The doctrine of cy pres permits the courts to modify the charitable purpose of a charitable trust to a purpose that reasonably approximates the designated purpose, where the designated charitable purpose becomes unlawful, impossible, or impracticable to carry out or where it becomes wasteful to apply all of the property to the designated purpose.

January 9, 2013 No Comments

Grantmaking and Gift Planning

Protection of Charitable Assets Act

Proponents of the Act argue that registration of charities is important for several reasons. The first of which is that a list of registered charities can serve as a resource for the Attorney General and the public. Additionally, a potential donor will be able to consult the list to ensure that a charity is current in its filings which will help in making an informed decision about contributing. Lastly, the registration requirement serves to remind anyone who operates or plans to operate a charity of the seriousness of the fiduciary duty one undertakes as a director or trustee of a charity.

Detractors of the Act can point to numerous cases of overreaching by State Attorneys General over the years as well as existing multistate registration burdens on charities that fundraise in multiple jurisdictions.

May 3, 2011 No Comments

Permanent Endowment = Infinity and Beyond

Most non-profits understand that if a fund is a permanent endowment, the principal must be preserved in perpetuity. Still, in my practice I am often surprised by how little some fundraising professionals understand about the mechanics of gift restrictions – particularly the implications of permanent restrictions and legal meaning of the term endowment.

September 23, 2009 No Comments

UPMIFA

What You Need to Know About Endowment Restrictions

IRS Guidance Breathes New Life Into Mission-Related Investing

Managing Donor Restricted Gifts

Nonprofit Law Jargon Buster: What is the Cy Pres Doctrine?

Protection of Charitable Assets Act

Permanent Endowment = Infinity and Beyond

How to Keep your Non-Profit Compliant in All 50 States

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