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Factual Background:

Edwin and Karl Hardt are executors of the estate of Selma J. Hartke.  Ms. Hartke’s will gave the executors discretion to distribute the remainder of her estate to charitable organizations of their choosing.  The Hardts determined to use a large portion of the estate to support the pro-life cause.  In 2001, the Hardts met with representatives from Vitae, a non-profit charitable corporation describing itself as an advertising campaign for the pro-life cause.  Vitae presented a grant proposal, stating that the funds would be used to expand Vitae’s media campaigns to ten new markets and that the gift would be a “matching gift,” to be spent in equal proportions to funds raised by Vitae in each of the ten markets.  By using the funds as a “matching gift,” Vitae said the grant would entice other donations in the markets to ensure a lasting donor base for future campaigns.  Following the meeting, the Hardts gave Vitae $4,242,000, accompanied by a letter of intent detailing the grant was to be used as a matching gift to permit development of the new markets.  In 2002, the Hardts gave an additional $3,000,000 to be used as a matching gift.

In 2003, the former National Project Director of Vitae contacted the Hardts’ counsel and informed him that portions of their gift was not being used in accordance with the conditions placed on the gift, but were instead being expended for administrative expenses and without the receipt of matching funds.  The Hardts requested an accounting of their gift from Vitae, and they were then informed of the different development strategy implemented subsequent to their gift.  The Hardts claimed that the last accounting provided to them by Vitae in 2005 shows extensive misuse of the 2001 gift.  On August 6, 2008, the Hardts filed a petition seeking detailed accountings of both gifts, the restoration of any part of the gifts spent in contravention of the conditions, an injunction preventing any future misuse of the gifts, or in the alternative, the transfer of the 2001 gift to another organization of their choosing.  On September 22, 2008, Vitae filed a motion to dismiss the petition.

Held:   

The Circuit Court of Cole County granted Vitae’s motion to dismiss, stating that the Hardts lacked standing to enforce the conditions on their charitable gift.  The Hardts appealed.

On Appeal:

Affirmed.  Donors of charitable gifts do not have standing to enforce the conditions of their charitable gifts.  According to common law charitable trust principles, and by the newly-adopted Uniform Prudent Management of Institutional Funds Act (UPMIFA), only the Attorney General has the ability to enforce restrictions on charitable gifts.

Rationale:

The Missouri Uniform Trust Code specifically grants settlers of charitable trusts the ability to enforce the trust.  RSMo. §456.4-405.3.  This law applies only to trusts, not to charitable gifts.  Though common law charitable trust principles have often applied to charitable corporations, that is not enough to authorize an extension of the MUTC—a statute that, on its face, only applies to trusts—to gifts made outright to charitable corporations.  Moreover, Missouri adopted the UPMIFA this year, and the prefatory note of the UPMIFA explicitly acknowledges that the Attorney General “continues to be the protector both of the donor’s intent and of the public’s interest in charitable funds.”  Prefatory Note, Uniform Prudent Management of Institutional Funds Act, at 4 (2006).  And, while there may be times when the Attorney General does not sufficiently represent a donor’s interest, such an argument cannot even be attempted when the Attorney General was never involved at all.

The doctrine of cy pres can act to amend a charitable gift to prevent the gift from failing, usually when a donee ceases to exist.  Where, however, the gift was completed to the organization of the donor’s choosing but the donor simply feels that the organization is not using the gift pursuant to the restrictions imposed upon it, cy pres is not applicable.  Even if cy pres was applicable, a donor of a charitable gift still faces the standing challenge.