You may recall our December 2021 update on a broad Ohio education bill containing language that would protect donor intent in endowment agreements with public colleges and universities. That legislation — Sub. Senate Bill No. 135 — stemmed from an ongoing dispute between the family of Michael Moritz and Ohio State University regarding misuse of a $30.3 million endowment created by Moritz in 2001. In testimony before the Ohio House of Representatives Committee on Higher Education and Career Readiness, I argued the bill offered provisions that would benefit and encourage philanthropy in three important ways: giving donors the legal standing to file complaints, allowing for the appointment of legal representatives and providing remedies that are restorative rather than punitive. Unfortunately, Philanthropy Roundtable recently learned Ohio lawmakers are bending to critics of the legislation – and dropping language that protects donor intent.
While the bill passed the Ohio Senate by a bipartisan vote of 31-2 in June 2021, it faced several serious challenges in the state’s House of Representatives. Members of the House Higher Education and Career Readiness Committee expressed concerns the donor intent part of the bill resulted from one donor’s battle with one institution and was not indicative of a common problem. Another issue that threatened House passage of the bill was the misapprehension that a donor’s assigned legal representative would be able to redirect endowment funds in violation of donor intent. While those who offered testimony in favor of the bill last October tried to counter these concerns, we were ultimately unsuccessful.
In mid-March the Estates & Trusts section of the Ohio State Bar Association announced it would not support the legislation. Members of the section had a variety of reasons for their opposition. Some suggested a benefactor should have no right to sue to enforce breached commitments in endowment agreements or that the provisions should apply only to new endowment agreements. Others argued estates should have no right to enforce a late benefactor’s agreement. Although the bill’s supporters proposed several compromises, the Estates & Trusts section continued its opposition, and legislators consequently pulled all donor intent provisions from the bill.
Jeff Moritz and his attorney, David Marburger, have assured us the fight for donor intent legislation is ongoing, saying, “It’s definitely not over yet. This is a setback but there may be some opportunities in the future to get legislation passed.” We will continue to keep you informed about any new efforts to introduce legislation to protect donor intent in Ohio and elsewhere.