In 2023, following passage of the Donor Intent Protection Act in Kansas, Philanthropy Roundtable launched a monthly series on donor intent developments and controversies nationwide to better inform you about this important topic. The Donor Intent Protection Act has now passed in Kentucky, Georgia and Montana, and efforts on behalf of this legislation will continue in additional states in 2025 and 2026.
We encourage donors to contact us with any questions 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.
This month’s Donor Intent Watch opens with a most unusual donor intent dispute from the United Kingdom – one involving llamas, alpacas and other four-footed creatures. We close with the fifth in a series on the importance of choosing the right vehicle(s) for your giving. In this installment, we share the pros and cons of using community foundations.
Llamas, Alpacas and Bears – Oh My!
A British court recently resolved a donor intent dispute resulting from the bequest of Candia Midworth, who died in 2022. Midworth had been a director of the British Llama and Alpaca Association and editor of its magazine.
Her will – written in 1994 – directed her estate of 1.9 million pounds (over $2.5 million in U.S. dollars) to be divided equally among six animal-welfare charities. At that time, three of the named charities were unincorporated entities, but are now incorporated and registered as charities. One of the six charities no longer exists.
One of the named beneficiaries, British Camelids Ltd, protested that because four of the named charities “no longer existed in the form specified,” only they and the British Union for the Abolition of Vivisection (now Cruelty Free International), were entitled to inherit. They proposed that each organization receive 50% of the estate.
The court dismissed this argument, “ruling that the gifts should not necessarily fail simply because the originally named entities no longer exist, provided the broad charitable purposes continue.” And because those purposes were still being fulfilled by successor organizations, the court ruled that Midworth’s estate be divided into six equal shares benefiting charities pursuing the charitable missions she supported, ranging from the welfare of alpacas and donkeys to the protection of captive bears.
This court decision is an exemplary defense of donor intent – first, in choosing to ignore the change in charitable status of three of the named beneficiaries, and second, in utilizing cy pres, to ensure charities engaged in the mission of a named, but now defunct, organization receive funds to support their activities.
Thanks to Lexology for reporting on this court case from the U.K., and to Emma Sinclair of Stevens & Bolton, LLP for the original summary of the case.
Use Caution with Community Foundations
More than 900 community foundations operate in the United States, serving areas large and small. What all community foundations share is a long-term commitment to their place through the pooling of resources from many donors into a permanent endowment. Including gifts from donor-advised funds, the Council on Foundations reported community-foundation assets totaled just shy of $152 billion in 2023 and grants totaled more than $18 billion in that year.
You don’t have to use a donor-advised fund to give through a community foundation, particularly if you have wide-ranging interests in a particular locality. But be aware that if you go with a non-DAF option and add your donations to the broad pool of money in the community foundation, it will be impossible for you to enforce any specific donor intent down the road.
- If you give to a general unrestricted fund, the foundation will respond to community needs and fund its own priorities as it judges best.
- If you give to a field-of-interest fund your money will go to one broad priority, like arts and culture, children and youth, environment, etc., with all details at the discretion of the community fund managers.
- If you establish a designated fund, you can support a specific purpose like annual scholarships or specify local charities as your beneficiary organization(s). You can also choose the timetable on which payments are made. But these are not DAFs, and if a designated organization goes out of business or changes its purpose, the community foundation can use your designated fund to support other organizations.
From a donor-intent perspective, it’s wise to explore giving options at community foundations with a good deal of caution. Remember that all gifts to community foundations, including those which establish donor-advised funds, are gifts you no longer legally control. With DAFs you can recommend grantees. With other giving options, a governing or distribution board—intended to reflect community interests—typically oversees grantmaking, so your contribution could go to a cause you find objectionable.
Community foundations may also impose restrictions on prospective grantees that counter your giving preferences. For example, they may disallow requests for general operating support or capital projects. They may avoid certain philosophies or ideas. Make sure you understand such grantmaking guidelines before donating.
In many instances, donors and community foundations do forge long-lasting and mutually rewarding relationships around a specific place to which they are both committed. From a donor-intent perspective, however, it’s wise to explore non-DAF giving options at community foundations with a good deal of caution.
