Donor Intent Watch: New Controversies, Court Updates and Religious Freedom Issues 

In 2023, following the 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 an update on a California dispute we discussed in 2023, coverage of a museum’s request to change the terms of a recent bequest, a donor’s lawsuit with religious freedom implications and more welcome comments from another donor-affirming fundraising adviser.  

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.  

A College by Any Other Name: “Hastings College of the Law”   

In July 2023 we discussed a donor intent lawsuit that challenged state legislation changing the name of University of California Hastings College of the Law to University of California College of the Law, San Francisco. Signed by Gov. Gavin Newsom on September 30, 2022, the law resulted from several years of controversy regarding the law school’s founder, Serranus Clinton Hastings.  

In 1878, Hastings made a gift of $100,000 in gold to establish the institution. Among other stipulations in that agreement was one which ensured the school would forever be called the “Hastings College of the Law,” and which promised Hastings’s heirs the return of his gift — with interest — should the school ever “cease to exist.” Beginning in 2017, however, news articles appeared in regional and national newspapers accusing Hastings of encouraging and financially supporting lethal violence against Native Americans in the 1850s.  

This has been a particularly interesting dispute to follow because of the use of legislation by California to invalidate the 1878 agreement. The lawsuit filed by Hastings College Conservation Committee, which includes alumni and six descendants of the law school’s founder, argued the legislation was not only “an unconstitutional impairment of the state’s contractual obligations to S.C. Hastings and his descendants,” but it also “violate[d] constitutional prohibitions against bills of attainder and ex post facto laws, as well as the California Constitution’s requirement that the College remain in its existing ‘form and character,’ free from sectarian or political influence.”  

In February 2024, Reuters reported the dismissal of the lawsuit, saying Superior Court Judge Richard Ulmer ruled that “the 1878 legislation that established the University of California Hastings College of the Law was not a contract” and “the 2022 legislation that codified the new name did not violate the California Constitution.”  

Read more here.  

A Fund by Any Other Name? Orlando Museum of Art Goes to Court  

The New York Times reported on May 21 that the Orlando Museum of Art (OMA) recently received an estate gift of $1.8 million. The bequest came from the late Margaret Young and is the balance left in a trust she created for a daughter who died in 2023. The trust directs that upon that daughter’s death, the remainder should go to the museum for its “Permanent Collection Fund” and be used to add to their permanent collection. In better circumstances, this would likely be a most welcome donation. The museum is hurting financially, however, and is projecting a $1 million deficit by the end of June.  

The museum’s leadership has now asked the Orange County Circuit Court to modify the restriction, claiming the museum does not maintain a “Permanent Collection Fund” and creating such a fund for this bequest would incur costly legal fees. Instead, they are requesting they be allowed to apply the gift to “OMA’s general purposes related to, and in service of, its existing permanent collection,” including “curatorial staff, vault maintenance/repair, security devoted to the permanent collection, etc.” Florida’s Attorney General Ashley Moody has provided a letter of support for the museum’s petition.  

Pushback to this request is coming from OMA patrons, friends and outside observers. The Friends of American Art support the purchase of art for OMA’s permanent collection and have been assured their gifts can only be used for that purpose. They are wondering why they’ve been told “there is an account restricted to buying artwork for the permanent collection” when the court has been told the museum has no “Permanent Collection Fund.” Critics are also questioning why there is so much resistance to establishing such a fund in any case. 

Another individual closely following the case is Margaret Young’s surviving daughter who also has a trust which will, upon her death, give all remaining assets to OMA for its “Permanent Collection Fund.” She is concerned her mother’s intent may be altered by the court and wonders what such a ruling might bode for the remaining funds left in the trust she currently oversees. 

Read more here

Church Donor’s Dispute Raises Religious Freedom Issues 

In March 2021, James Huntsman, brother of former Utah Gov. Jon Huntsman Jr., sued The Church of Jesus Christ of Latter-day Saints. Huntsman, who had left the church in 2020, sought the return of $5 million, claiming he had tithed that amount in response to misleading statements from church leadership. Instead of using his donation entirely for promised charitable purposes, he says the earnings from his tithe were used to help support commercial activities.  

The church says its statements were accurate, that it neither solicited nor utilized tithes themselves – but only their earnings – for the commercial activities undertaken to protect the immediate vicinity of its Salt Lake City Temple. It adds Huntsman was certainly aware church assets find their source in tithing. 

Because of the central role of tithing in the faith and practice of The Church of Jesus Christ of Latter-day Saints (among others), the Becket Fund for Religious Liberty has submitted an amicus brief contending the First Amendment protects church autonomy in this case. Opponents argue this is essentially a civil suit about alleged fraud, and there should be no deference to religious authority. After three years of divergent court opinions, the Ninth Circuit Court of Appeals has ruled in favor of the church’s request for a full-court review with fresh oral arguments beginning the week of June 24.  

Read more here and here

Understanding Why Donors Make Restricted Gifts 

Philanthropy critics frequently describe donors who make restricted gifts as power-hungry and controlling. What these critics ignore is the extent to which donors choose restricted gifts as the means to reflect their closely held values and principles. So it was encouraging to read a recent LinkedIn post from Jim Langley, president at Langley Innovations, in which he explained and defended this growing trend he believes “will persist for decades to come.”   

“The trend has been persistent and more pervasive,” he notes, “and will continue notwithstanding the decrying being done or the effort to ‘educate’ donors to surrender their instincts and abandon their values and just ‘trust us.’ “Being a responsible philanthropic guide,” he adds, “requires one to help clients navigate the philanthropic world as it is, not be distracted by what some think donors ‘should do.’  

“Donors have been and will continue to place more conditions on their giving,” Langley concludes. “Those tendencies reflect both a loss of trust in institutions and a desire to make their giving more rewarding by bringing more of themselves into the process.”  

Read the full post here

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