Executive Summary
- Accountability and trust between donors and charities are vital to foster charitable giving and a robust civil society.
- Protecting donor intent is paramount to this trust. This is true for instances when donors give to a charity with specific agreements for how the donation will be used, and this is also true for when donors pass, and their intent is protected by their successors.
- Empirical research demonstrates that betraying a donor’s trust creates a significant drop in the donor’s willingness to give again. Ultimately, those served by charities lose when donor intent is violated.
- History offers us an abundance of examples of philanthropists whose charitable intentions were manipulated or disregarded over time. While there are specific steps donors can and should take to protect their intent, additional legal protections would benefit both donors and those who benefit from their gifts.
- For donors to give freely without concern that their mutually agreed upon instructions will be violated, a legal pathway for the enforcement of endowment agreements should be established.
Introduction
Philanthropy Roundtable supports the right of Americans to give freely to the charities of their choice. An integral pillar of respecting philanthropic freedom is ensuring fidelity to a donor’s intent over time. Protecting donor intent is an important precondition for encouraging generous Americans to support charities hard at work in our communities.
Our charitable sector faces ever-increasing challenges in supporting the most vulnerable in our communities. Ensuring the resources are available to meet these challenges depends on maintaining the trust of donors, and existing laws and regulations should reflect this. More than just a contractual issue of laws, donor intent is a moral issue: The integrity of donors’ principles and values should be preserved, even after they have passed away.
In this report, we describe two facets of donor intent. The first is the adherence to a donor’s values and priorities by his or her successors. For example, if a donor establishes a private foundation to support local education opportunities, and the foundation continues to operate after his or her passing, it is incumbent on the successors to ensure the donor’s intent is respected. To protect this facet of donor intent, donors must take action to plan for the future of their resources.
The second element of donor intent, and the primary focus of this report, is the compliance with explicit gift agreements when a donor gives to a charity. To protect donor intent when such a gift is made, policymakers should consider enacting legal pathways to enforce agreements so that donors and their representatives can enforce written agreements.
Unfortunately, history abounds with examples of philanthropists whose charitable intentions were manipulated or disregarded over time. These philanthropists include great tycoons, such as John Howard Pew, as well as some less well-known families who offer equally important examples of disregarded donor intent. As things currently stand, there is often no legal recourse to enforce mutually agreed upon instructions for how gifts are disbursed once a donor gives money to a charity. State lawmakers might consider establishing enforcement mechanisms to protect the fidelity of donors’ investments and maintain the trust that is so vital to our thriving charitable sector.
Protecting Donor Intent Protects Giving
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