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This entry was published on 2014-09-22
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SECTION 555
Release or modification of restrictions on management, investment, or purpose
Not-for-Profit Corporation (NPC) CHAPTER 35, ARTICLE 5-A
§ 555. Release or modification of restrictions on management,

investment, or purpose.

(a) If the donor consents in a record, an institution may release or
modify, in whole or in part, a restriction contained in a gift
instrument on the management, investment, or purpose of an institutional
fund. A release or modification may not allow a fund to be used for a
purpose other than a charitable purpose of the institution.

(b) A court, upon application of an institution, may modify a
restriction contained in a gift instrument regarding the management or
investment of an institutional fund if the restriction has become
impracticable or wasteful, if it impairs the management or investment of
the fund, or if, because of circumstances not anticipated by the donor,
a modification of a restriction will further the purposes of the fund.
The institution shall notify the donor, if available, and the attorney
general of the application, and the attorney general and such donor must
be given an opportunity to be heard. To the extent practicable, any
modification must be made in accordance with the donor's probable
intention.

(c) If a particular purpose or a restriction contained in a gift
instrument on the use of an institutional fund becomes unlawful,
impracticable, impossible to achieve, or wasteful, the court, upon
application of an institution, may modify the purpose of the fund or the
restriction on the use of the fund in a manner consistent with the
purposes expressed in the gift instrument. The institution shall notify
the donor, if available, and the attorney general of the application,
and the attorney general and such donor must be given an opportunity to
be heard.

(d)(1) If an institution determines that a restriction contained in a
gift instrument on the management, investment, or purpose of an
institutional fund is unlawful, impracticable, impossible to achieve, or
wasteful, the institution, ninety days after notification to the
attorney general, may release or modify the restriction, in whole or
part, if:

(A) the institutional fund subject to the restriction has a total
value of less than one hundred thousand dollars;

(B) more than twenty years have elapsed since the fund was
established; and

(C) the institution uses the property in a manner consistent with the
purposes expressed in the gift instrument.

(2) Notice to the attorney general shall contain: (A) an explanation
of (i) the institution's determination that the restriction meets the
requirements set forth in subparagraph one of this paragraph and (ii)
the proposed release or modification; (B) a copy of a record of the
institution approving the release or modification; and (C) a statement
of the proposed use of the institutional fund after such release or
modification.

(3) If the attorney general does not notify the institution within
ninety days, the institution may proceed with the release or
modification.

(4) Notice shall also be given to the donor, as defined in paragraph
(a-1) of section 551 (Definitions), if available, provided, however,
that such notice shall not be required for funds described in clause (B)
of subparagraph two of paragraph (e) of section 553 (Appropriation for
expenditure or accumulation of endowment fund; rules of construction).

(e) For purposes of this section, an institution may apply to the
following courts to release or modify a restriction contained in a gift
instrument:

(1) to the supreme court of the judicial district wherein the
institution has its office or principal place of carrying out the
purposes for which it was formed; or

(2) where the applicable gift instrument is a will, to the surrogate's
court in which such will is probated.

(f) This chapter shall not limit the application of the doctrines of
cy pres and deviation.