Understanding the Donor Intent Protection Act

In 2023, Philanthropy Roundtable introduced a new model bill in the states, the Donor Intent Protection Act (DIPA). When a donor gives a gift to a charity’s endowment, with a written agreement of how it will be used, there is often no recourse for the donor if the agreement is later violated. This legislation provides a legal pathway for the enforcement of written endowment agreements, which encourages giving and benefits donors, charities and the many individuals served by nonprofit organizations.

Good stewardship means charities strive to take the utmost care in honoring their commitments to a donor’s gift intent. Unfortunately, history is filled with examples of these commitments being broken. Most problems with intent arise due to staff turnover, simple misinterpretations or agreements that were written decades ago and are forgotten. In most cases, the issue can be resolved between the donor and the recipient. But in some instances, a court may need to step in. This is where the Donor Intent Protection Act comes into play.

At present, donors in all but three states have no guaranteed legal recourse to remedy violations of gift agreements. As Philanthropy Roundtable’s research shows, most states have adopted some form of the Uniform Prudent Management of Institutional Funds Act (UPMIFA). This Act allows institutions to petition the state’s attorney general to modify a restricted gift (typically up to $25,000) without a donor’s knowledge. Some states like Georgia, however, allow gift modification up to $100,000. Some say UPMIFA protects the institution, not the donor. 

Contrary to what many believe, UPMIFA does not give donors legal standing, or the ability to pursue legal enforcement of their written gift agreements. In most states, it is up to the court to determine if the case will move forward. The Donor Intent Protection Act gives donors peace of mind that should they need to take legal action, they have the standing to do so. Unlike UPMIFA, the Donor Intent Protection Act does not rely on intervention from the state attorney general. Donors can still involve the state attorney general if they choose, but this gives them an alternative option. They can file a suit directly with the court.  

What does this legislation do?

  • The Donor Intent Protection Act provides donors with legal standing in their respective state should a written gift agreement be violated.
  • This legislation offers appropriate remedies to a donor should a violation be found. These remedies will be consistent with the recipient charity’s mission and the intent of the written endowment agreement. The donor would receive neither damages nor any personal benefit.

What does this legislation not do?

  • The Donor Intent Protection Act does not prohibit a charity from changing their mission.
  • The Donor Intent Protection Act does not discourage charitable giving. In fact, the opposite is true.
  • The Donor Intent Protection Act will not lead to a deluge of lawsuits.
  • The Donor Intent Protection Act does not allow the donor or their legal representative to receive the gift back, should a donor’s wishes be violated.
  • The Donor Intent Protection Act does not interfere with UPMIFA nor does the legislation modify a state’s UPMIFA statute.

Trustees and board members overseeing the disbursements of charitable gifts have a moral obligation to spend the donor’s money on causes that most align with the intent of the donor. We believe this bill bolsters levels of trust between donors and charities by adding an extra layer of protection for donor intent so donors can give freely and generously without concern that their mutually agreed upon instructions will be violated.

The Donor Intent Protection Act has been enacted in Georgia, Kansas and Kentucky. Legislators in each of these states have taken commendable steps to ensure a donor’s intent when giving to an endowment remains protected under state law. Donors will be far more inclined to give generously with the safeguards this bill offers.

Additional resources by Philanthropy Roundtable can be found in the Donor Intent Primer, Protecting Donor Intent: A 50-State Analysis of Legal Protections and our monthly Donor Intent Watch blog.

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