Washington Code 24.03A.195 – Binding agreement to modify or release restrictions
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(1) If a gift instrument limits the use of the gift to one or more charitable purposes, and the conditions set forth in subsection (3) or (4) of this section are satisfied, then the gift instrument may be modified by agreement of the nonprofit corporation, the attorney general, and all other interested parties.
Terms Used In Washington Code 24.03A.195
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Donor: The person who makes a gift.
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
(2) For purposes of this section, an “interested party” does not include:
(a) The donor; or
(b) Any member of any charitable class that the gift would benefit, either before or after the modifications to be made by the agreement.
(3) A restriction related to a gift’s management or investment may be modified by an agreement described in subsection (1) of this section if:
(a) Because of circumstances not anticipated by the donor, modification will further the charitable purpose of the gift;
(b) Enforcement of the restriction has become impracticable or wasteful; or
(c) Enforcement of the restriction impairs the management or investment of the gift.
(4) A restriction on the use of a gift relating to the gift’s charitable purpose, rather than its management or investment, may be modified by an agreement described in subsection (1) of this section if the purpose becomes unlawful, impracticable, impossible to achieve, or wasteful.
(5) An agreement described in subsection (1) of this section must:
(a) Be in writing and executed by all of the parties;
(b) Be binding and conclusive on the nonprofit corporation and all other parties with a beneficial interest in the gift;
(c) Identify the gift instrument and the term or terms of the gift instrument that it modifies;
(d) Describe completely the modifications that it would make;
(e) Set forth the reasons why the modifications would comply with subsection (3) or (4) of this section; and
(f) State changes to the charitable purposes to which the use of the gift is limited, if any, resulting from the modifications.
(6) The nonprofit corporation or its legal representative may file the executed agreement with the court within thirty days of the agreement’s execution by all parties. Upon filing of the executed agreement with the court:
(a) The agreement becomes effective and equivalent to a final court order binding on the nonprofit corporation and all other parties with a beneficial interest in the use of the gift; and
(b) The modifications are deemed approved by the court, and have the same effect as if the court ordered them pursuant to RCW 24.03A.200.
(7) The nonprofit corporation or its legal representative may, as an alternative to the procedure described in subsection (6) of this section, petition the court for a hearing for presentation of an agreement entered under this section to the court within twenty-one days of the agreement’s execution by all parties. The nonprofit corporation shall (a) provide notice of the time and date of the hearing to each party to the agreement unless that party has waived notice in the form of a record, and (b) file proof of mailing or delivery of the notice or waiver with the court. At the hearing, the court shall review the agreement on behalf of all the parties. The court shall determine whether the agreement adequately represents and protects the interests of the parties and the public interest, and enter an order declaring its determination. If the court determines that the agreement does not adequately represent and protect those interests, then the agreement is void.
NOTES:
Effective date—2021 c 176: See note following RCW 24.03A.005.