A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ENACTING THE "SAFEGUARDING ENDOWMENT GIFTS ACT" BY ADDING ARTICLE 2 TO CHAPTER 6, TITLE 34 SO AS TO PROHIBIT CHARITABLE ORGANIZATIONS FROM VIOLATING WRITTEN DONOR RESTRICTIONS EXCEPT WHEN REQUIRED OR AUTHORIZED BY FEDERAL OR STATE LAW; TO REQUIRE NOTIFICATION TO DONORS WHEN A CHARITABLE ORGANIZATION IS UNABLE TO FULFILL ONE OR MORE TERMS IN AN ENDOWMENT AGREEMENT; TO ESTABLISH JUDICIAL PROCESSES AND REMEDIES WHEN CHARITABLE ORGANIZATIONS VIOLATE DONOR IMPOSED RESTRICTIONS IN ENDOWMENT AGREEMENTS; TO PERMIT CHARITABLE ORGANIZATIONS TO SEEK A JUDICIAL DECLARATION OF RIGHTS AND DUTIES AND RELATED PROVISIONS; AND TO DESIGNATE SECTIONS 34-6-10 THROUGH 34-6-100 AS ARTICLE 1, "GENERAL PROVISIONS."

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  This act may be cited as the "Safeguarding Endowment Gifts Act."

 

SECTION 2.  Chapter 6, Title 34 of the S.C. Code is amended by adding:

 

Article 2

 

Safeguarding Endowment Gifts

 

    Section 34-6-200.  For purposes of this article only:

    (1) "Charitable organization" means an organization organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, educational, or other specified purposes and that is tax exempt from federal income tax as an entity described in Internal Revenue Code Section 501(c)(3).

    (2) "Donor" means an individual or entity who has made a contribution of property or money to either an existing endowment fund or a new endowment fund of a charitable organization or of a charitable trust pursuant to the terms of an endowment agreement that may include donor-imposed restrictions or conditions governing the use of the contribution.

    (3) "Endowment agreement" means a written agreement between a charitable organization and a donor or between a charitable trust and a donor regarding the contribution made by the donor and accepted by the charitable organization or the charitable trust. An endowment agreement may include donor-imposed restrictions or other conditions governing the use of the contribution.

    (4) "Donor-imposed restriction" means a written statement within an endowment agreement that specifies obligations regarding the management or purpose of the endowment fund.

    (5) "Legal representative" means the administrator or executor of a person's estate, a surviving spouse if a court judgement has settled the accounts of the estate, or a person designated in an endowment agreement, whether or not born at the time of such designation, to act in place of a party to the agreement for all matters expressed in the agreement and all of the actions it contemplates including, but not limited to, interpreting, performing, and enforcing the agreement and defending its validity.

    (6) "Property" means real property, personal property, money, cryptocurrency, stocks, bonds, or any other asset or financial instrument.

 

    Section 34-6-210.  No charitable organization that accepts a contribution pursuant to a written donor-imposed restriction may violate the terms of that restriction except where specifically required or authorized by federal or state law.

 

    Section 34-6-220.  In the event a charitable organization is unable to fulfill one or more terms in an endowment agreement, the donor or that person's legal representative shall be notified thirty days prior to the charitable organization utilizing the contribution and offered an alternative solution that closely matches the initial term in the endowment agreement.

 

    Section 34-6-230.  (A) If a charitable organization violates a donor-imposed restriction contained in an endowment agreement, the donor or the donor's legal representative may file a complaint within six years after discovery for breach of such agreement. The donor or the donor's legal representative must provide the charitable organization at least ninety days' notice before filing the complaint.

    (B) The complaint may be filed in either a court of general jurisdiction in the county where the charitable organization has its principal office or principal place of carrying out its charitable purpose; or in a court of the United States whose district includes such county. The complaint may be filed regardless of whether the endowment agreement expressly reserves a right to sue or enforce the terms of the endowment agreement. However, the plaintiff shall be prohibited from seeking a judgment awarding damages to the plaintiff.

 

    Section 34-6-240.  (A) A charitable organization may obtain a judicial declaration of rights and duties expressed in an endowment agreement containing donor-imposed restrictions regarding all of the actions that the endowment agreement contemplates. A judicial declaration may include, but not be limited to, the interpretation, performance, and enforcement of the endowment agreement and a determination of the endowment agreement's validity.

    (B) The charitable organization may seek a judicial declaration as described in subsection (A) by filing a complaint but must request a judicial declaration in the event a lawsuit is filed pursuant to this article.

 

    Section 34-6-250.  If the court determines that a charitable organization violated a donor-imposed restriction in an endowment agreement, the court may order one or more remedies consistent with the charitable purposes expressed in the endowment agreement. The court shall not order the return of donated funds to the donor or the donor's legal representative or estate.

 

    Section 34-6-260.  Nothing in this article affects the authority of the attorney general to enforce any restriction in an endowment agreement, limits the application of the judicial power of cy pres, or alters the right of an institution to modify a restriction on the management, investment, purpose or use of an endowment fund in a manner permitted by the endowment agreement and by this chapter.

 

SECTION 3.  The provisions of this act shall supersede any statute that conflicts with this act.

 

SECTION 4.  Sections 34-6-10 through 34-6-100 are designated as Article 1, "General Provisions."

 

SECTION 5.  This act takes effect upon approval by the Governor.

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