Donor Intent Watch: How to Establish Powerful Board Policies and Practices to Protect Donor Intent 

In 2023, following passage of the Donor Intent Protection Act in Kansas, Philanthropy Roundtable launched a monthly series on donor intent developments and controversies around the country to better inform those who care about this important topic. The Donor Intent Protection Act has now passed in Kentucky and Georgia as well, and efforts on behalf of this legislation continue in additional states.  

This month’s Donor Intent Watch includes reporting on the treatment of race-specific scholarships at several public universities, a legal appeal by the Ohio attorney general to protect donor intent at the library of a Jewish seminary and a reminder about the importance of maintaining good governance policies and practices to maintain the donor’s values and principles.  

We encourage donors to contact us with any questions they have about our featured items and consult additional resources on donor intent at the Roundtable’s Donor Intent Hub. We also welcome any news about donor intent we may have missed.  

Applying Race-Conscious Admissions Restrictions to Scholarships / Banning DEI Initiatives 

Two state university systems are in the news because of internal decisions to apply the SCOTUS rulings in the Students for Fair Admissions cases against Harvard University and the University of North Carolina to financial aid as well. In Missouri and Ohio, administrators are removing race-conscious language not only from institutional grants, but also from scholarships funded by private donors who had stipulated the restriction of awards to certain racial and ethnic groups. 

Shortly after the June 2023 decision, Missouri’s attorney general, Andrew Bailey, instructed the public higher education institutions in his state to change the criteria for all race-based scholarships. Ohio’s attorney general, David Yost, issued a similar message later that summer, with a spokesperson noting in January 2024, “Race-based scholarships discriminate on the basis of race in awarding benefits. Therefore, it would follow that such programs are unconstitutional.”  

It is not certain the SCOTUS ruling on admissions applies to scholarships, but neither is it certain it does not apply. While the legal impact of maintaining or eliminating race-conscious scholarships remains murky, the impact on donors is clear.  

MU News Bureau Director Christian Basi told Inside Higher Ed Missouri had added a protective clause to gift agreements about 15 years ago to permit alterations to comply with changes in federal law without donor consent, and many scholarships have already been revised. But for those donors who cannot be reached or disagree with the change, the scholarships will be frozen in the upcoming academic year. 

To emphasize their determination, the Missouri system’s board of curators also filed a court petition in late May asking for the power to act unilaterally to override older agreements or those where they do not have donor approval to remove all racial criteria from scholarship gifts. Donor reaction has typically been disappointment, but demands that funds be returned and threats of legal action are also on the horizon.  

Ohio’s public higher education institutions face a similar situation and have frozen all scholarships containing criteria based on race while they are reviewed. KBIA Public Radio has also reported, “Ohio University officials said because of the court’s ruling and the attorney general’s guidance, their review will go beyond race-based scholarships. They’re now looking at awards that mention other protected classes, including gender-based scholarships.”  

In Texas, 131 race-conscious scholarships are in play as public university officials freeze them or revise their eligibility criteria. Unlike public systems in Missouri and Ohio, the Texas institutions are responding to a state law banning spending on diversity, equity and inclusion initiatives. Senate Bill 17 went into effect on January 1, 2024. Its author, Sen. Brandon Creighton, R-Conroe, told The Dallas Morning News, “The law makes clear that taxpayer funds should not be spent conferring special benefits based on race, color or ethnicity.”  

Many of the scholarships in question, while administered by public institutions, have been funded by individuals, families and other private donors who are uneasy and struggling to understand how their original intent can be maintained while adhering to the terms of the DEI legislation. 

We will be following developments in this area as higher ed institutions – both public and private – begin a new academic year in August.  

Read more on Missouri here and here

Read more on Ohio here

Read more on Texas here.  

Ohio Attorney General Seeks to Stop Sale of Rare Book Collection, Cites Donor Intent 

David Yost, Ohio’s attorney general, has requested a temporary restraining order to prevent Hebrew Union College from selling items in the rare book and manuscript collection housed in the Klau Library on its Cincinnati campus. A hearing on the request is scheduled for July 12. 

Founded in 1875, the school is the oldest Jewish seminary in the United States and operates three additional campuses in Los Angeles, New York and Jerusalem. Declining enrollment has led to financial concerns and officials are seeking to determine the value of its collections.  

Yost’s filing suggests sales from that collection may violate the intent of donors who made gifts to purchase and preserve items in the collection to ensure they would be available to scholars in the future. 

Read more here.  

How to Establish Powerful Board Policies and Practices to Protect Donor Intent 

You’ve established an appropriate governance structure for your philanthropy and carefully chosen board members. Now it’s time to adopt board policies and practices to create a pervasive culture that honors donor intent. When staff and grantees see your board takes seriously your philanthropic wishes, they better understand the same is expected of them.  

Here are eight steps you may consider taking. 

1. Regularly review your mission statement 

Many foundations choose a regular time—such as once a year at annual board meetings—to read their mission statement. Instituting this sort of ritual reminds trustees of their founder’s original purpose and, through discussion, gives them a chance to evaluate how they’re measuring up in current grant decisions.  

2. Create a culture that honors donor intent 

Set aside time at board meetings to share a story about a grant or two that are manifestly advancing the foundation’s mission. Another powerful tool to bind future generations to donor intent is an oral history—or better, a video—of the founder speaking about the motivation for engaging in philanthropy. 

3. Require board members to sign a statement 

Some philanthropies require board members to sign a statement of donor intent. It might be part of a broader ethics and governance training session or stand on its own.  

4. Create advisory directors 

Advisory directors attend and participate in all board meetings but have no vote on the actions of the board. They keep up with all board activities and participate in board discussions and serve annual terms with no limit on the number of consecutive terms they might serve. Some may progress to board membership and may play a key role in your succession planning, especially if you plan to operate your foundation in perpetuity.  

5. Require peer review among board members 

Creating a review process to assess whether board members are actively respecting and honoring donor intent, when combined with appropriate follow-up by the board chair, can be a valuable tool for evaluation and ongoing education.  

6. Establish board member removal powers 

Some foundations choose to give supermajorities of their boards the power to remove an individual member. Others vest that power in a single individual, such as a family member, family adviser or outside entity (such as a public charity you work closely with). 

7. Ensure individual grants bolster your intent 

Your goal should be to create a culture in your foundation that instinctively honors donor intent—from the board chair through the administrative staff. One of the best ways to do this is by ensuring grant awards honor your intent while you are around. 

Develop grantmaking guidelines with donor intent in mind: Use your grantmaking guidelines as another way to communicate intent to program officers, other staff members and prospective grantees. Clearly articulated grantmaking guidelines remove pressure from board members—who will likely be the frequent recipients of off-mission requests from outside parties—and enable them to decline such requests.  

Give board members discretionary grants: Foundations may give their directors discretionary grantmaking authority over a predetermined amount. This is designed to recognize trustees and directors for their commitment and remove the temptation of proposing pet projects or other grants that do not align with the foundation’s mission.  

8. Scatter reminders of donor intent around your building 

If you have a building or office devoted to your foundation, consider using this physical space to enshrine your donor intent. Memorabilia and photos of your donor(s) are visible reminders of the values and mission that drive your philanthropy. 

Read more in Philanthropy Roundtable’s guidebook Protecting Your Legacy

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