N.Y. Not-for-Profit Corporation Law 555 – Release or modification of restrictions on management, investment, or purpose
§ 555. Release or modification of restrictions on management,
Terms Used In N.Y. Not-for-Profit Corporation Law 555
- Charitable purpose: means the relief of poverty, the advancement of education or religion, the promotion of health, the promotion of a governmental purpose, or any other purpose the achievement of which is beneficial to the community including any purpose that is charitable under the laws of the state of New York. See N.Y. Not-for-Profit Corporation Law 551
- Donor: means the person who grants or transfers property to an institution pursuant to a gift instrument, or a person designated in the applicable gift instrument to act in the place of the donor, but does not otherwise include the person's executors, heirs, successors, assigns, transferees, or distributees. See N.Y. Not-for-Profit Corporation Law 551
- Donor: The person who makes a gift.
- Endowment fund: means an institutional fund or part thereof that, under the terms of a gift instrument, is not wholly expendable by the institution on a current basis. See N.Y. Not-for-Profit Corporation Law 551
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- Gift instrument: means a record or records, including an institutional solicitation, under which property is granted to, transferred to, or held by an institution as an institutional fund. See N.Y. Not-for-Profit Corporation Law 551
- Institution: means : (1) a person, other than an individual, organized and operated exclusively for charitable purposes; (2) a trust that had both charitable and noncharitable interests, after all noncharitable interests have terminated; or (3) any corporation described in subparagraph five of paragraph (a) of section 102 (Definitions). See N.Y. Not-for-Profit Corporation Law 551
- Institutional fund: means a fund held by an institution. See N.Y. Not-for-Profit Corporation Law 551
- Notice: means information given by an institution as required by this article. See N.Y. Not-for-Profit Corporation Law 551
- Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See N.Y. Not-for-Profit Corporation Law 551
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.