A Philanthropy Roundtable review of court rulings finds that donors and their estates often lack standing to enforce restricted gifts; the group urges state legislation to protect donor intent.
Most courts leave enforcement of restricted charitable gifts to state attorneys general, meaning donors and heirs often cannot sue when institutions change how gifts are used.
The Philanthropy Roundtable reviewed a decade of cases and found universities were the most frequent recipients accused of disregarding donor restrictions.
# What the report examined
Roundtable reviewed roughly 10 years of court rulings where donors clashed with universities and other institutions over how gifts were used. The review found a pattern: when a university or nonprofit unilaterally changes the stated purpose of a restricted gift, donors and heirs typically have little legal ability to force compliance or recover unused funds.
# How enforcement works now
State laws governing charitable gifts typically give the state attorney general authority to bring legal actions to enforce donor restrictions. Donors, estates, and other private parties often lack legal standing to sue. That legal structure means many disputes never reach a courtroom unless the attorney general takes an interest.
Roundtable says these examples are representative: universities account for much of the caseload the group reviewed.
# Who is affected
The report emphasizes that smaller donors are particularly vulnerable. Philanthropy Roundtable staff note families that endow modest scholarships—examples cited include a $10,000 scholarship endowed in a parent's name—may not have legal resources and cannot get a hearing when an institution diverts the funds. The students who were supposed to receive those scholarships can also lose out.
The report also notes that high-profile multimillion-dollar disputes get media attention, but they do not change the underlying legal framework that limits private enforcement.
# Context: renaming and diversity-related changes
# Proposed legal change
Philanthropy Roundtable recommends state legislation based on its Safeguarding Endowment Gifts Act model. The model would protect donor restrictions and provide donors opportunities to address perceived misuse. Versions of this model law have passed in Georgia, Kansas, Kentucky, and Montana.
# What this means for donors and institutions
Donors considering restricted gifts should be aware that, under current practice in many states, legal enforcement is often limited to the attorney general's office. Families making modest, purpose-restricted gifts may have little practical recourse if an institution redirects funds. Institutions and fundraisers will need to weigh the potential for legal restrictions and the political debate around new state laws when negotiating gift agreements.
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