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New State Laws Give Charities More Wiggle Room on Endowment Spending

The Chronicle of Philanthropy

September 17, 2009

Barry C. Hawkins, a Connecticut lawyer who helped draft the endowment-spending statute adopted by all but seven states, says he understands the hesitancy to consider spending from ailing funds.

But, he argues, the new laws give charities a better chance than previous rules did to spend money wisely and according to what donors would want.

"Donors don't want money maintained for the sake of maintaining it," he says. "They would rather see the scholarship paid or the organization to keep operating than to see the charity that they cared enough about to support not have the means to do its work."

He says that the new state laws encourage nonprofit officials to put substantial time and thought into their choices. The top consideration, he says: Preserve the endowment.

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