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Endowed Scholarship Fund with no Gift Agreement

  • 1.  Endowed Scholarship Fund with no Gift Agreement

    Posted 20 days ago
    Good morning,

        I've run into a situation where we have an old endowed scholarship fund with no MOU. The donor passed away years ago before the fund was fully vested in order to take a distribution. Another donor (no relation to the original donor) has added to the fund to bring it full value in order for distributions to be made. The original donor has a niece but we don't know how close they were. Can we just use the distribution as unrestricted financial aid, do we need to contact the niece to see if she knows her aunt's wishes or should we contact legal for a determination? The donor named the fund (the xxxx Endowed Scholarship Fund) so we know it's for a scholarship.

    Thanks for any insight,
       Trisha

    ------------------------------
    Patricia Ayers
    Assistant Vice President of Advancement
    Bates College
    payersmi@bates.edu
    ------------------------------


  • 2.  RE: Endowed Scholarship Fund with no Gift Agreement

    Posted 20 days ago
    In strict compliance with the Donor Bill of Rights, I believe you owe it to the original donor to confirm your plans with that donor's legal representative.  Remember, endowments are subject to some fairly strict legal standards and fall under your own state UPMIFA rules.  As a legally binding instrument, I think it is best to cross all t's, dot all i's, fully document your efforts, and create a formal endowment agreement to support your plans.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Endowed Scholarship Fund with no Gift Agreement

    Posted 20 days ago

    We went through this recently with a number of endowed funds.  Working in tandem with our General Counsel, a 'courtesy letter' was drafted and sent to the next of kin.  This letter provides the proposal for criteria and asks that if the recipient does not agree or has information to offer, to contact the university by mm/dd/yyyy. 

     

    Every state is different, however. 

     

    Best regards,

     

    Tracy

     






  • 4.  RE: Endowed Scholarship Fund with no Gift Agreement

    Posted 20 days ago
    Thanks everyone!

    Trisha






  • 5.  RE: Endowed Scholarship Fund with no Gift Agreement

    Posted 20 days ago
      |   view attached
    Trisha,

    Every state law is different, so I would recommend talking to your legal team but even though you do not have a gift agreement. Any documentation would be considered a gift instrument. If the donor never made their intent it would be extremely complex. It depends on the pledge that the donor made and what gift documents you do have. 

    You might need to follow the Uniform Prudent Management of Institutional Funds Act (UPMIFA). This could be different for your state but for mine, it means the following: 
     

    If the gift agreement (any documentation) does not contain language addressing the possibility of amendments and we need to change the agreement for any reason, and the donor is deceased or otherwise unavailable, UPMIFA provides two options. 

    1. For funds that are more than 10 years old and contain less than $100k, you can modify restrictions that are unlawful, impracticable, impossible to achieve or wasteful by writing a letter to the Attorney General. The Attorney General will then have 60 days to object. After 60 days, if the Attorney General has not objected, the restriction is considered modified. 
    2. For all other funds (i.e., funds that are less than 10 years old or contain more than $100k), the foundation will need to obtain approval from the superior court in order to modify a restriction.

    This applies to funds that even don't have a gift agreement, if it was established by a donor. So the niece would not be able to change or establish the fund purpose. Also, was there anything in his will? 

    I am not a lawyer (just talk to them hourly here at NC State) but I would talk this over with legal. I have attached our talking points on UPMIFA.

    Let me know, if you have any questions.