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Michigan Bill Would Require Foundations to Give Locally

June 19, 2006

(June 19, 2006) Recently introduced legislation in the Michigan House of Representatives would require foundations incorporated in the state to give half of their annual grants to Michigan charities unless broader national or international activity is explicitly  permitted by the organization’s  articles of incorporation.

The bill, H.B. 6153, introduced by Rep. Andy Dillon (D-Redford) and Rep. Bill Huizenga (R-Holland) creates two standards that would be applied during legal actions involving charitable trusts. Unless there was specific relevant language in the foundation’s articles of incorporation and other documents regarding its charitable purpose, the following standards would be used to prove that the organization is violating its mission and the intent of its founders:

  • If less than 50% of the amount of the trust's grants or distributions in the most recent 3-year period before the action is commenced were made to recipients located outside of the geographic location (state) where the grantors originally established the trust.
  • If less than 50% of the amount of the trust's grants or distributions in the most recent 3-year period before the action is commenced were made to different types of recipients than the types of recipients to which grants or distributions were made by the charitable trust in the period from the appointment of the original trustees of the trust to the time that more than 50% of the trustees are not original trustees of the trust.

Essentially, the bill would compel some foundations incorporated in Michigan to give at least 50 percent of their grants to recipients in the state. In addition, those grants would have to be given to organizations of a similar nature to those charities which received grants from the foundation when it was first formed.

The bill is not necessarily expected to pass the legislature, but has drawn intense opposition from the foundation community. Additional legislation regarding donor intent and foundation board membership is also being considered.

A copy of the bill is available on the Michigan Legislature website.

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