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  • 1.  Fund stewardship, intent and requirements

    Posted 09-22-2025 02:59 PM

    Hi everyone. I've been thinking about endowed fund stewardship lately, and I think I'm experiencing some cognitive dissonance. I've been in this profession a long time, beginning in donor stewardship. I've always taken our commitment to fulfilling donor intent very seriously. 

    Maybe a little too seriously?

    I know that a gift involves the donor relinquishing control (IRS Pub 526). Donors can't maintain control, yet we demonstrate our compliance with their intentions all the time. Donors ask us how we spent their funds. Auditors ask us to demonstrate that we have allocated according to donor intent. When we can't do that, our endowment payouts accumulate, so there is a real cost to not being able to honor donor intent. Indeed, our endowments are so binding, we can only change some of them in probate court. 

    So, if the donor relinquished control, how free are we really?
    Are there certain "intentions" that we ought not honor, even if we wanted to?  (eg gender, religion, family descent) 

    Thanks,
    Susan



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    Susan Quinn
    Lenoir-Rhyne University
    emmersonquinn@gmail.com
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  • 2.  RE: Fund stewardship, intent and requirements

    Posted 09-22-2025 03:27 PM
    Many intentions are flat-out illegal, from my experience. Your endowment agreements must include a savings clause that gives you latitude when it is determined that an original criterion is no longer legal or viable.

    The savings clause must be constructed in conversation with Counsel. If you have agreements that do not include such a clause, you may need to consider an addendum.

    Here are some example savings clauses we developed while I was at NC State. No doubt they have been improved upon since then. But these might still be useful:

    "Donor agrees that the university may modify the criteria for this gift over time if it determines that the purposes of the gift are in whole or in part contrary to law or changes occur such that the program or purpose is unable to be fulfilled. In such an event, the university shall use the gift in the matter that most closely satisfies the intentions of the donor to the extent possible."

    "The University may modify or disregard any selection criteria if determined in whole or in part to be contrary to law or then existing University policies."

    "The wishes of the Donors shall be loyally observed, so long as in the opinion of the University such wishes do not conflict with the proper administration of the University under changes that may develop in the course of time or are in contrary to law.  Should such changes occur, the University shall use the gift in a manner that satisfies the intentions of the Donors as closely as possible."

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987




    Original Message


  • 3.  RE: Fund stewardship, intent and requirements

    Posted 09-22-2025 03:40 PM
    Thanks very much, John. We do have a similar savings clause in the majority of our agreements, but only enforce it when we have to.
    Where can I look to find more information about the kinds of restrictions that may no longer be legal?
    Much thanks,






    Original Message


  • 4.  RE: Fund stewardship, intent and requirements

    Posted 09-22-2025 04:02 PM
    You need to speak with Counsel. Generally, the following (with some exceptions) are not legal:
    • Race or Ethnicity
    • Sex-Based
    • Religion-Based
    • Marital Status
    • Citizenship or National Origin
    Title VI and Title IX cover most of the above. 

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


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