Five States Gave Donors Standing to Sue Over Restricted Gifts

Ask a donor who has just signed a seven-figure endowment agreement what would happen if the institution quietly spent the money on something the gift never named, and most will describe a moral breach rather than a legal one, because the working assumption across philanthropy is that a restricted gift binds the recipient's conscience while the power to enforce it sits with a state attorney general rather than with the donor. Five states have now written a different answer into law, and it has drawn little notice outside trust-and-estate practice.

Montana became the fifth on April 17, 2025, when its governor signed the Safeguarding Endowment Gifts Act, which amends the state's version of the Uniform Prudent Management of Institutional Funds Act and lets a donor, or the donor's legal representative, file a complaint against a charity within three years of discovering that the charity violated the endowment agreement. Iowa opened the door when it first adopted UPMIFA in 2008, Kansas followed with its Donor Intent Protection Act in 2023, and Georgia and Kentucky passed their own versions in 2024, so what once looked like a single-state curiosity is now a five-state pattern with Oklahoma, Ohio, and Vermont weighing similar bills. The remedy is deliberately narrow, because the law does not let a donor claw the money back into their own hands, it only lets the donor force the gift back into the use the agreement named, which means the donor is being handed the power to enforce intent rather than the power to undo the gift.

The quiet part these statutes expose is that donor intent has always depended less on the words in a gift agreement than on who holds standing to defend them. A restriction that only a state regulator can enforce operates as a promise, and a restriction the donor can personally carry into court operates closer to a property right. For decades the sector treated the two as the same thing, because a signed agreement felt like protection, so the practical question of who could actually enforce it stayed buried under the paperwork. These laws drag that question into the open by moving enforcement authority to the party with the strongest reason to use it.

For nonprofits and foundation professionals, this is a governance fact that now has to be priced into every restricted gift, because an endowment held under one of these statutes carries live litigation exposure that did not exist three years ago, so the stewardship function that used to end at the thank-you letter now runs the full life of the fund. A Montana institution that finds it cannot honor a restriction must give the donor ninety days of notice and offer an alternative that closely matches the original term before it changes anything, which turns donor communication from a courtesy into a compliance step with a clock attached.

For donors and family-office advisors, standing is the difference between a gift agreement that reassures and one that governs, so the decision about where to place a major restricted gift now turns partly on which state's law will sit behind it. An advisor who structures a family's endowment giving without checking whether the recipient's state grants donor standing is leaving the family's intent enforceable only through a state attorney general rather than by the family directly.

For digital and crypto-native giving leaders, the parallel deserves a long look, because the entire promise of on-chain giving is that participation and enforcement can be written into the rail itself, and here a legislature has done something structurally similar with statute instead of code by making the donor's right to enforce a gift real rather than advisory. A donor-advised fund grants its donor advisory privileges that the sponsor can override, and a governance token often grants its holder a vote too small to move any outcome, so both fall short of the standard these endowment laws just set, which is a right the holder can actually exercise against the institution that holds the money.

For corporate giving and CSR leaders, a company that funds a restricted endowment at a university or a community foundation in one of these states now holds a durable, legally enforceable interest in how that gift performs, which means a corporate signature program can be written to bind its recipient in a way that survives a change of leadership on either side of the agreement.

For NGOs and international organizations, the doctrine sets a domestic benchmark that cross-border donors will start to expect, because once a major donor learns that a restricted gift can be personally enforced at home, the absence of any comparable recourse abroad reads as a visible risk rather than an accepted cost of giving across borders.

The move for any organization that accepts restricted endowment gifts is to find out today which of its funds sit in states that grant donor standing, and to treat those agreements as enforceable instruments rather than aspirational statements, because the cost of learning the distinction during litigation runs far higher than the cost of mapping it now.

The reframe worth carrying out of this is easy to state and hard to live by, which is that a restriction is only as real as the nearest party who can enforce it, so the design question for any giving structure is who gets to say no when the institution stops honoring donor intent.

A gift restriction is only as strong as the person standing closest to it with the power to enforce it, and for the first time in most of these states, that person is the donor.

Eileen Hernandez, The Strategic Steward

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This is what Participatory Ownership looks like when it arrives through a statehouse instead of a smart contract, because the pillar was never about the technology, it was always about whether the people a system claims to empower hold a right they can actually use.