Document Type

Article

Abstract

Set against the backdrop of fiduciary duties governing nonprofit organization management, this article explores donor restrictions imposed upon gifts made to charitable recipients. The particular focus falls upon charitable gift restrictions that prove difficult for the recipient organization’s management to implement as time passes from the date of the gift. This article examines the trust doctrine of cy pres as the traditional remedial device for addressing such concerns, but ultimately finds that doctrine wanting - particularly so in an environment of increasingly corporate charitable governance. After explaining the long-noted vagaries of cy pres in practical application, this article reveals the basic irrelevance of that doctrine to the often lengthy period during which management is charged with stewarding a gift in compliance with the donor’s restrictive mandates. As further detailed, any such influence likely flows in the direction of a managerial incentive to circumvent application of cy pres doctrine, frequently at the expense of the very donor intent that the doctrine professes to protect.

Ultimately, this article rejects the constraints imposed by prior doctrine. Thus freed, the approach offered here provides a more structured and objective analysis for dealing with the difficulties that arise when static donor directives confront evolving societal needs and charitable objectives. Central to this analysis is a new and fundamentally different way of understanding “donor intent” when evaluating problematic gift restrictions. That new perspective, in turn, supports this article’s radical recasting of how decision-makers should approach service to this foundational donor intent notion. Importantly, such service comes not only in the context of cy pres adjudications, but also in relation to the restricted gift management that precedes invocation of that remedial doctrine. The resulting analytical framework therefore better serves the modern managerial context in which restricted charitable gifts are so often put to use.

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