1 1 0 1 0 1 0 1 LEGISLATURE OF THE STATE OF IDAHO Sixty-fourth Legislature First Regular Session 0 IN THE SENATE SENATE BILL NO. BY BUSINESS AND COMMERCE COMMITTEE AN ACT REPEALING CHAPTER, TITLE, IDAHO CODE; AMENDING TITLE, IDAHO CODE, TO INCLUDE A NEW CHAPTER KNOWN AS THE IDAHO CHARITABLE ASSETS PROTECTION ACT; MAKING LEGISLATIVE FINDINGS; DEFINING TERMS; AUTHORIZING THE ATTORNEY GENERAL TO ENFORCE THIS ACT THROUGH INVESTIGATIONS, COURT-APPROVED SETTLEMENTS AND ENFORCEMENT ACTIONS; AMENDING IDAHO CODE -01(), RELATING TO THE DUTIES OF THE ATTORNEY GENERAL; AMENDING IDAHO CODE -0, RELATING TO CHARITABLE TRUSTS. Be It Enacted by the Legislature of the State of Idaho: SECTION 1. That chapter, title, Idaho Code, be, and the same is hereby repealed. SECTION. That title, Idaho Code, be, and the same is hereby amended by the addition of a NEW CHAPTER, to be known and designated as chapter, title, Idaho Code, and to read as follows: CHAPTER IDAHO CHARITABLE ASSETS PROTECTION ACT PART 1 PRELIMINARY PROVISIONS --1. SHORT TITLE. - This act may be cited as the Idaho Charitable Assets Protection Act. --. LEGISLATIVE FINDINGS AND INTENT. - (1) The legislature finds that the state of Idaho is home to thousands of charitable organizations that hold billions of dollars in charitable assets. Charitable organizations have a duty to use their charitable assets according to the charitable purpose designated in their governing documents. The legislature is aware, however, that misuse, waste or misappropriation of charitable assets occurs within charitable organizations. () The attorney general, as the state of Idaho s chief legal officer, is best positioned to ensure that charitable organizations utilize their charitable assets to further their charitable purpose. WORKING DRAFT (//0) - 1
1 1 0 () The current statutes governing the attorney general s authority over charitable assets inadequately define the attorney general s duties or enforcement authorities. Further, Idaho law does not effectively define the attorney general s authority to address a person s misuse, waste or misappropriation of charitable assets. () Therefore, through this act, it is the legislature s intent to: (a) Define the attorney general s duties to protect charitable assets from misuse, waste or misappropriation and provide the attorney general with the necessary authority and enforcement tools to enforce this act; (b) Protect the public from deceptive or misleading charitable solicitations; and (c) Provide a procedure for terminating a charitable organization or liquidating a charitable organization s charitable assets. () The provisions of this chapter are remedial and shall be construed and applied liberally to accomplish the above-stated purposes. This act governs charitable organizations, as defined in the act, that hold charitable assets property intended to benefit the general public as opposed to a specific person or group of persons. Every year, charitable organizations provide millions of dollars in services to Idahoans and assist vulnerable citizens whose needs otherwise would go unmet. A primary goal of the act is to better define the attorney general s authority over charitable assets. The common law authority of the attorney general to supervise charitable trusts dates back to th Century England when the king s chancellor began enforcing, on behalf of the beneficiaries, the duties of trustees. Idaho statutorily adopted the common law of England in 1, but in 1 the Idaho Supreme Court called the attorney general s authority over charitable trusts into question. In Hedin v. Westdala Lutheran Church, Idaho 1, 1 P.d 1 (1), the Idaho Supreme Court invalidated a provision in a will that left the residue of the testator s estate to the trustee that the trustee, at his discretion, could distribute for charitable and religious purposes. The Idaho Supreme Court expressed concern that if the provision was upheld no one would have standing to ensure the trustee properly distributed the funds. Id. at 0, 1 P.d at 0. Despite common law precedent giving the attorney general standing in cases involving charitable trusts, as well as an 1 Idaho statute adopting the common law of England, the Idaho Supreme Court denounced the attorney general s authority to protect public charities, finding, [a]pparently, in some states, the attorney general has power to commence and maintain suits to protect public charities where property intended for their WORKING DRAFT (//0) -
use is not being properly applied. In [Idaho], such is not one of the duties of that official. Id. at 0-1, 1 P.d at 0-1. It was not until 1 that the legislature restored the attorney general s common law authority over charitable trust assets. By enacting Idaho Code -01(), the legislature gave the attorney general authority over charitable trust assets in conformity with the common law. Idaho Session Laws, Chapter 1, 1 (p. ). See also In re Eggan s Estate, Idaho, P.d (1) (providing that the 1 amendment to Idaho Code - 01 expanded the attorney general s duties to include enforcing charitable trusts). Today, the attorney general s activities in the charitable trust arena involve (a) enforcing the terms of charitable trusts, see, e.g., Estate of Eggan, Idaho, P.d (1) (will contest); & Dolan v. Johnson, Idaho, 0 P.d 0 (1) (will contest); (b) advocating the validity of charitable trusts, see, e.g., Yribar v. Fitzpatrick, 1 Idaho, P.d (1) (will contest); & Memorandum Decision and Order, In the Matter of the Estate of Diana K. Tibbets, CV-0- (Idaho nd Dist. Ct. Aug. 0, 0) (holographic will contest); and (c) reviewing requests to modify or terminate charitable trusts. While the attorney general, pursuant to the attorney general s present authority under the Idaho Charitable Solicitation Act (ICSA), chapter, title, Idaho Code, may investigate and take action regarding false, deceptive, misleading, or unconscionable charitable solicitations, the attorney general s authority to investigate and prosecute charitable organizations that misuse, waste, or misappropriate charitable assets is inadequate. The attorney general presently has no authority beyond the ICSA to pursue a director or officer who personally misuses, wastes or misappropriates an organization s charitable assets. This act remedies those enforcement gaps. At present, different titles and chapters of the Idaho Code address the attorney general s authority to review and approve modifications of charitable trust instruments. This act incorporates the attorney general s duties and authorities within one chapter. 1 --. DEFINITIONS. - Unless defined elsewhere in this act, as used in this act: (1) Attorney general means the attorney general of the state of Idaho or the attorney general s designee. () Charitable asset means property, real or personal, that a charitable organization holds for a charitable purpose. () Charitable organization means a person who holds charitable assets solely for a charitable purpose, regardless of the legal form of such organization. () Charitable purpose means: (a) Any purpose described in section 01(c)() of the Internal Revenue Code of 1. (b) Any philanthropic, humane, patriotic, social welfare or advocacy, public health, environmental, civic, veteran or other eleemosynary purpose; or (c) Any purpose benefitting law enforcement personnel, firefighters or other persons who protect the public safety. WORKING DRAFT (//0) -
1 1 0 1 0 1 () Charitable solicitation means any oral or written request, directly or indirectly, for money, credit, property, financial assistance or other thing of value on the plea or representation that such money, credit, property, financial assistance or other thing of value or any portion thereof, will be used for a charitable purpose or to benefit a charitable organization. No contribution need be made in order for a charitable solicitation to be deemed to have taken place. () Container means a publically placed receptacle where a person may deposit a contribution. () Contribution means the donation, grant or promise or pledge of property in response to a charitable solicitation. () Disclosure label means a written notice that is securely affixed to a container and that clearly and conspicuously discloses: (a) The approximate annual percentage paid, if any, to any person or charitable organization to maintain, service or collect the contributions raised by the solicitation; (b) The net percentage or sum paid to the specific charitable purpose in the most recent calendar year; and (c) Whether a volunteer or paid person maintains, services, and collects from the container. () Person means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency or instrumentality, or any other legal or commercial entity. () Responsible party means a director, officer, executive, manager, trustee, member or employee or any other fiduciary of a charitable organization. () State means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States. To the extent possible, Idaho Code -- incorporates the terms and definitions of the Idaho Charitable Solicitation Act (ICSA), chapter, title, Idaho Code, which will be repealed and merged into this act. This comment discusses only those terms that are new or altered. Charitable asset. The intent of this definition is to encompass all interests in real or tangible or intangible personal property that a charitable organization may hold, regardless of the legal form of the organization. Donors have many options when they contribute to a charitable cause. In addition to giving traditional gifts of cash, clothes, or food, the public may donate conservation or preservation easements or restrictions, cars, securities and, among other things, interests in retirement plans or life insurance policies. Other forms of property WORKING DRAFT (//0) -
interests that fall within this definition include (a) property held for a length of time in a building fund; and (b) property given to a charitable organization with a restricted use. On the other hand, property held for a for-profit purpose is not a charitable asset. For example, even though for-profit hospitals and universities perform functions typically categorized as charitable (health care and education), their property is not considered a charitable asset. Also, property held in a revocable trust that provides a remainder interest for a charitable purpose is not a charitable asset while the settlor is alive because the settlor can revoke or change the interest. Charitable organization. Idaho Code --() simplifies the more detailed definition of charitable organization in Idaho Code -0(1)(b) [to be repealed], and includes all organizations holding exclusively charitable assets irrespective of the legal form of the organization Person. The definition of person is from the definitions section (Idaho Code - 00()) in the Idaho Uniform Prudent Management of Institutional Funds Act ( UPMIFA ), chapter 0, title, Idaho Code. 1 1 1 0 1 --. COURTS NOT IMPAIRED. - Nothing in this act shall impair the rights and powers of the courts of this state with respect to any charitable organization. --. CONFLICT OF LAWS. - This act shall apply whenever a provision of this act conflicts with another Idaho law or rule concerning the attorney general s authority over charitable assets. --. REFERENCES TO INTERNAL REVENUE CODE OF 1. - All references to Internal Revenue Code of 1 in this act shall refer to that term as it is now and hereafter defined in section -00(a), Idaho Code. --. RULEMAKING AUTHORITY. The attorney general may make rules and regulations interpreting provisions of this act. Such rules and regulations shall be promulgated as provided in chapter, title, Idaho Code. PART CHARITABLE SOLICITATIONS --01. UNLAWFUL ACTS. - (1) It is unlawful for a person, except a religious corporation, association, educational institution or society, to utilize any unfair, deceptive, misleading or unconscionable act or practice to solicit a contribution. () It is unlawful for a religious corporation, association, educational institution or society, to knowingly or willfully WORKING DRAFT (//0) -
utilize any unfair, fair, deceptive, misleading or unconscionable act or practice to solicit a contribution. () It is unlawful for a person to use a container in a public place to solicit contributions by offering a product for sale knowing the container does not have a disclosure label affixed to it. It is an absolute defense to prosecution under this subsection if the person soliciting contributions has given one hundred percent (0%) of the receipts generated by the container to a charitable organization that used or will use the receipts to further the charitable purpose for which the person solicited the contributions. () In deciding whether an act or practice is unfair, false, deceptive, misleading or unconscionable within the meaning of this subsection, the applicable definitions, standards and interpretations of the Idaho consumer protection act, chapter, title, Idaho Code, and regulations promulgated under the act shall apply. Idaho Code --01 outlines the acts or practices of charitable organizations and commercial solicitors that are declared unlawful. The section substantially restates subsections (1) through () of Idaho Code -0 [Idaho Charitable Solicitation Act,], which will be repealed. 1 1 0 1 0 1 --0. PRIVATE CAUSE OF ACTION LIMITATION OF ACTION. (1) Any person who, pursuant to a charitable solicitation, suffers damages as a result of any act, conduct or practice declared unlawful under the provisions of this part, shall have the same rights and remedies in seeking and obtaining redress under the provisions of this part as those granted under the Idaho consumer protection act, chapter, title, Idaho Code. () No private action may be brought under the provisions of this part more than two () years after the cause of action accrues. () A cause of action shall be deemed to have accrued when the person bringing the action knows or in the exercise of reasonable care should have known about the violation of the provisions of this chapter. () The remedies provided for in this section are not exclusive and shall be in addition to any other procedures or remedies for any violation or conduct provided for in other law. () As used in this section only, damages means a loss, detriment or injury, whether to person, property, reputation or rights through any act or practice declared unlawful under the provisions of this chapter. WORKING DRAFT (//0) -
Idaho Code --0 combines Idaho Code -0 and -0 [Idaho Charitable Solicitation Act (ICSA)], and authorizes a private individual, pursuant to the Idaho Consumer Protection Act s private right of action statute, Idaho Code -0, to file a lawsuit against a person who violates Idaho Code --01. In a lawsuit, the individual may recover damages, which is defined in paragraph (). This definition is identical to the definition that previously appeared in the ICSA at Idaho Code -0() [repealed]. 1 1 1 0 1 PART CHARITABLE ORGANIZATIONS --01. UNLAWFUL ACTS. (1) It is unlawful for a responsible party to: (a) Knowingly use the charitable organization s charitable assets for the responsible party s or another person s private purposes; or (b) Knowingly divert the charitable organization s charitable assets from the charitable purpose for which they were solicited, donated, granted or devised, unless the charitable organization has complied with all applicable legal requirements or donor restrictions to lawfully divert the charitable assets. () It is unlawful for a charitable organization to: (a) Knowingly allow the private use of the charitable organization s charitable assets; or (b) Knowingly allow the diversion of the charitable organization s charitable assets from charitable purpose for which they were solicited, donated, granted or devised unless the charitable organization has complied with all applicable legal requirements or donor restrictions to lawfully divert the charitable assets. () A responsible party is not liable under this section if the person discharged his duties as a responsible party in compliance with the standards of conduct set forth in 0-0-1, Idaho Code, or section 0-0-, Idaho Code. WORKING DRAFT (//0) - Section --01 remedies the attorney general s inability to hold one or more bad actors within a charitable organization, as well as the charitable organization, accountable for their unlawful activities. The attorney general has encountered instances where one officer (e.g., president, treasurer, etc.) knowingly misused charitable assets, but was not required to return the funds. Oftentimes and for various reasons, charitable organizations decline to bring civil actions or file police reports regarding these incidents. This statute brings within the attorney general s authority a person s knowing misuse, waste or misappropriation of charitable assets. Paragraph () exempts a responsible person from liability under section --01 if the person establishes that he acted according to the conduct standards provided for directors and officers in the Idaho Nonprofit Corporation Act, chapter 0, title 0, Idaho Code.
1 1 0 --0. SALE OR TRANSFER OF ALL OR SUBSTANTIALLY ALL CHARITABLE ASSETS. (1) A charitable organization holding charitable assets with a fair market value of one hundred thousand dollars ($0,000) or more shall notify the attorney general according to this section at least thirty (0) days before it sells, leases, exchanges or otherwise disposes of all, or substantially all, of its charitable assets in a transaction not in the usual and regular course of its activities unless the attorney general has given the charitable organization a written waiver or the charitable organization is subject to chapter, title, Idaho Code. () Notification to the attorney general must be in writing and include, at a minimum, the following, if available: (a) Legal names and mailing addresses of all parties who are participating in the proposed transaction; (b) Description of the proposed transaction; (c) Copy of the proposed purchase and sale agreement, if any; and (d) Copy of the appraisal, property valuation or similar report, if any. Most states include a notice requirement similar to this in their nonprofit corporation acts. The Idaho Nonprofit Corporation Act, however, excludes any notice to the attorney general when a nonprofit corporation dissolves or sells its assets. See Idaho Code 0-0- 0. The attorney general often learns from second-hand sources that an organization has sold its assets to a private entity or that it has transferred its assets to an organization that does not share the transferring organization s charitable mission. Charitable organizations have options when they cease doing business, including transferring their assets to another charitable organization or selling their assets to a forprofit for their fair market value. Board members, however, focus on wrapping up the organization s affairs and may not adequately consider the consequences of abandoning charitable assets or giving them to a for-profit corporation. Currently, the attorney general receives no notice when a charitable organization (other than a nonprofit hospital) sells all or substantially all of its charitable assets. Section --0 addresses this deficiency. If the attorney general receives adequate notice of the sale, the attorney general can work with the charitable organization to properly distribute the charitable assets. Nonprofit hospitals that are subject to the requirements of chapter, title, Idaho Code, are excluded from the statute and the attorney general may issue a written waiver when appropriate. The term substantially all is used in the Idaho Nonprofit Corporation Act, which is based on the Model Revised Nonprofit Corporation Act. The Official Commentary states that WORKING DRAFT (//0) -
the question of what is substantially all of a corporation s property is a factual question to be determined after an examination of all relevant facts. (Official Comment to.01) 1 1 PART ATTORNEY GENERAL S ENFORCEMENT AUTHORITY --01. INVESTIGATORY AUTHORITY OF ATTORNEY GENERAL. - Whenever the attorney general has reason to believe that a person has violated or is violating this act, the attorney general may: (1) Serve investigative demands using the same procedures and in the same manner as delineated in section -, Idaho Code; () Issue subpoenas and conduct hearings using the same procedures and in the same manner as delineated in section -, Idaho Code; () Apply to the district court for compliance orders using the same procedures and in the same manner as delineated in section -, Idaho Code; and () Retain certified fraud examiners, accountants, appraisers and other experts to assist the attorney general with the attorney general s investigation. Unless a comment notes otherwise, the sections in Part substantially comport with the investigatory and enforcement provisions contained in the Idaho Consumer Protection Act (ICPA), chapter, title, Idaho Code. Obvious changes include substituting, where appropriate, the defined terms from section -- for certain ICPA terms and inserting necessary references to sections within this act. Excluding paragraph () of section --01, this section references the investigatory authorities granted to the attorney general under the ICPA, as well as the ICPA enforcement provisions available to the attorney general when a suspected violator fails to answer an investigative demand or subpoena. As for paragraph (), it is necessary because charitable asset investigations produce volumes of financial data that require organization and analysis. A certified fraud examiner has the requisite knowledge to compile the data into a useful format and extract the information the attorney general needs. Through settlement agreements with charitable organizations or in court judgment against charitable organizations, the attorney general attempts to recover the costs his office incurs to retain experts. 1 0 1 --0. VOLUNTARY COMPLIANCE DISTRICT COURT APPROVAL. - (1) The attorney general may accept an assurance of voluntary compliance from a person who the attorney general has reason to believe violated or is violating this act. () Such assurance shall be in writing and be filed with and subject to the approval of the district court of the county in which the person resides or has his principal place of business or WORKING DRAFT (//0) -
1 1 0 1 in the district court of Ada County and shall be deemed an order of the court enforceable by contempt proceedings. () Such assurance of voluntary compliance shall not be considered an admission of violation for any purpose. () Such assurance shall prohibit the person from violating this act. () Such assurance may include a stipulation between the parties that requires the person to: (a) Reimburse the attorney general for the attorney general s reasonable expenses, investigative costs and attorney's fees; (b) Pay actual damages or restitution of money, property or other things; (c) Submit reports to the attorney general concerning the charitable assets or charitable organization; or (d) Perform specific acts relating to the charitable assets or charitable organization. () A violation of such assurance of voluntary compliance constitutes prima facie evidence that the person knows, or in the exercise of due care should know, that he has in the past violated or is violating this act. () Matters closed pursuant to this section may at any time be reopened by the attorney general for further proceedings in the public interest pursuant to section --0, Idaho Code. Section --0 substantially mirrors section - of the ICPA except for the addition of subparagraph ()(c), which allows the district court to require a person to submit reports to the attorney general. Investigations involving charitable assets are financially driven. By requiring suspected violators to submit financial disclosures, the attorney general is better able to identify potential problems early and thereby reduce recidivism. 0 1 --0. CONSENT DECREE DISTRICT COURT APPROVAL. - (1) In lieu of instigating or continuing an action or proceeding under section --0, Idaho Code, the attorney general may accept a consent decree from a person who the attorney general has reason to believe violated or is violating this act. () Such consent decree shall be in writing and be filed with and subject to the approval of the district court of the county in which the person resides or has his principal place of business or in the district court of Ada County. () Such consent decree shall stipulate that the district court, according to Rule (a) of the Idaho Rules of Civil Procedure, enter a separate judgment approving and adopting the terms and conditions of the consent decree. () Such consent decree shall prohibit the person from violating this act. WORKING DRAFT (//0) -
1 1 0 1 0 1 0 1 () Such consent decree may include a stipulation between the parties that requires the person to: (a) Reimburse the attorney general for the attorney general s reasonable expenses, investigative costs and attorney's fees; (b) Pay actual damages or restitution of money, property or other things; (c) Submit reports of information to the attorney general concerning the charitable assets or charitable organization; or (d) Perform specific acts relating to the charitable assets or charitable organization. --0. PROCEEDINGS BY ATTORNEY GENERAL. - (1) Whenever the attorney general has reason to believe that a person violated or is violating this act, the attorney general, acting in the public interest, may bring an action in the name of the state against such person: (a) To enjoin any action that constitutes a violation of this act by issuance of a temporary restraining order or preliminary or permanent injunction, upon the giving of appropriate notice to the alleged violator as provided in the Idaho rules of civil procedure; (b) To obtain appointment of a master, receiver or escrow agent to gather, account for and oversee charitable assets whenever it shall appear that such assets may be removed, concealed, disposed of or damaged during the course of the proceedings; (c) To remove the alleged violator from his position as a responsible party with respect to a charitable organization s charitable assets; (d) To terminate a charitable organization and liquidate its charitable assets in accordance with its governing instrument or applicable law; (e) To recover from the alleged violator actual damages or restitution of money, property or other things on behalf of the state or damaged consumers; (f) To recover from the alleged violator civil penalties of up to five thousand dollars ($,000) per violation of this act. (g) To obtain specific performance from the alleged violator; (h) To recover from the alleged violator the attorney general s reasonable expenses, investigative costs and attorney s fees; and (i) To obtain other appropriate relief. () The action may be brought in the district court of the county in which the alleged violator resides, or with consent of the parties, may be brought in the district court of Ada county. The action may be brought in any district court in this state if the alleged violator resides outside of the state. WORKING DRAFT (//0) -
() Unless the attorney general finds in writing that the enforcement provisions of this act will be substantially and materially impaired by delay in instituting legal proceedings, the attorney general shall, before initiating any legal proceedings as provided in this section: (a) Give written notice of the contemplated proceedings to the alleged violator. (b) Allow the alleged violator a reasonable opportunity to appear before the attorney general and execute an assurance of voluntary compliance under section --0, Idaho Code, or a consent decree under section --0, Idaho Code. Section --0 is based on section -0 of the ICPA. Subparagraph 1(d) allows the district court to order removal of an alleged violator who has authority over charitable assets. 1 1 0 1 0 1 0 --0. SERVICE OF NOTICE. - Service of any notice, demand or subpoena under this act shall be made personally within this state, but if such cannot be obtained, substituted service therefor may be made in the following manner: (1) Personal service thereof without this state; or () The mailing thereof by registered or certified mail to the last known place of business, residence or abode within or without this state or such person for whom the same is intended; or () As to any person other than a natural person, in the manner provided in the Idaho rules of civil procedure as if a complaint which institutes a civil proceeding had been filed. --0. VIOLATION OF INJUNCTION, JUDGMENT OR ORDER CIVIL PENALTY. - Any person who violates the terms of a judgment entered pursuant to section --0, Idaho Code, an injunction issued or an order or judgment entered pursuant to section --0, Idaho Code, or an order entered pursuant to sections --01() or - -0, Idaho Code, shall forfeit and pay to the state a civil penalty of not more than ten thousand dollars ($,000) per violation, the amount of the penalty to be determined by the district court issuing such order, judgment or injunction. For the purposes of this section, the district court issuing such order, judgment or injunction shall retain jurisdiction, and the cause shall be continued, and in such cases the attorney general acting in the name of the state may petition for recovery of civil penalties. --0. PENALTIES AND FEES RECOVERED DISPOSITION. - Any civil penalties, costs or attorney s fees sued for and recovered by the attorney general under this act shall be remitted to the WORKING DRAFT (//0) -
1 1 0 1 0 1 0 1 consumer protection fund created in section -0, Idaho Code, and shall be used for the furtherance of the attorney general's duties and activities under the provisions of this act. --0. CHARITABLE ASSETS RECOVERED CY PRES. Any charitable assets sued for and recovered by the attorney general under this act shall be conveyed: (1) To an injured charitable organization to restore its misappropriated, lost or diverted charitable assets; or () To any charitable organization pursuant to a court approved cy pres distribution. --0. CONSUMER RESTITUTION RECOVERED DISPOSITION. Any consumer restitution sued for and recovered by the attorney general under this act shall be deposited and held in the state treasury until such time as the attorney general directs that payment be made to a consumer to reimburse a consumer for any actual damages he incurred as a direct result of a violation of this act. SECTION. That Idaho Code section -01(), be, and the same is hereby amended to read as follows: () To supervise charitable organizations, as such term is defined in section --, Idaho Code, and to enforce whenever necessary any noncompliance or departure from the general purpose of such charitable organization as set forth and provided in title, chapter, Idaho Code. are subject at all times to examination by the attorney general, on behalf of the state, to ascertain the condition of its affairs and to what extent, if at all, said trustee or trustees may have failed to comply with trusts said trustee or trustees have assumed or may have departed from the general purpose for which it was formed. In case of any such failure or departure, the attorney general shall institute, in the name of the state, any proceeding necessary to enforce compliance with the terms of the trust or any departure therefrom. SECTION. That Idaho Code section -0, be, and the same is hereby amended to read as follows: -0. TRUSTEE MAY AMEND GOVERNING INSTRUMENT UNDER CERTAIN CIRCUMSTANCES. The trustee of a trust may, with the prior consent of the attorney general, amend the terms of the governing instrument to the extent necessary: (a) To assure conformity of the governing instrument with the requirements for exemption from the taxes imposed in sections 1 to of the Internal Revenue Code of 1, including amendments which broaden, extend, reduce or limit the charitable purposes for which the trust is administered; WORKING DRAFT (//0) -
1 1 0 (b) To terminate the status of the trust as a private foundation in a manner described in section 0(b)(1) of the Internal Revenue Code of 1; or (c) To terminate the trust and transfer its assets to one (1) or more entities described in section 01(c)() of the Internal Revenue Code of 1 because continuation is impractical due to its small size or impractical because of changed circumstances adversely impacting its purpose or purposes. Prior to giving consent, the attorney general shall determine that the proposed amendments are necessary or appropriate to achieve the charitable purposes of the trust. If the trust is for the exclusive benefit of one (1) or more charitable organizations, or in the event there are one (1) or more residual beneficiaries, the trustee shall also obtain the prior consent of such organizations or individuals prior to amending the terms of the governing instrument in the manner set forth in this section. Further, notwithstanding the provisions of section -01, Idaho Code, this section shall additionally apply to all trusts described in section 01(c)() of the Internal Revenue Code of 1. WORKING DRAFT (//0) -