The enactment of Kansas’ Donor Intent Protection Act this summer, on July 1, 2023, brought major modifications to the state’s version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA), located at K.S.A. §§ 58-3601–58-3625. Due to the Donor Intent Protection Act changes, individuals or their legal representatives now have legal recourse when beneficiaries violate restrictions stipulated in the endowment agreement. Refer to K.S.A. § 58-3621(b) for more detailed information.
This significant legal shift provides the ability for donors to push back legally in the event recipient entities fail to adhere to the stipulated restrictions in endowment agreements. Although this act was well received in Kansas, efforts to pass a similar law in Ohio have currently not met with success. A detailed report by Faegre Drinker Biddle & Reath LLP provides extensive information on this development.
To get a better understanding of the implications of this change, we can consider how things were before and contrast them with the current state in Kansas. Prior to the enactment of this Act, a donor had no legal method of addressing situations where their funds were misused. Now, donors can essentially “fight back” when their intentions for the donated funds, stipulated in an endowment agreement, are not respected.
By contrast, Ohio’s legal landscape remains unchanged for now. Legal professionals in this state continue to monitor the situation and are ready to navigate clients through any similar changes should they come into effect.
At the end of the day, this development catapults Kansas into a pioneering position in protections for donors and their interests. While it remains to be seen whether other states will follow suit, this significant legal move puts the conversation on the table, urging consideration of state laws to better manage donations and protect donor interests.