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Bill Summary · HB 720

HB 720 (Session 136) — Ohio

Focus

Establishes transparency and oversight standards for non-private endowment funds held by non-private institutions, and creates a framework for recovering public money deposited in tax-exempt organizations that fail to comply with federal tax reporting requirements.

Main purpose and intent

  • Create a regulatory regime for “non-private endowment funds” and the “non-private institutions” that hold them.
  • Provide mechanisms for oversight, reporting, and potential court modification of endowment obligations if sustainability concerns arise.
  • Authorize the state to recover public money deposited with tax-exempt organizations that do not comply with federal tax regulations and reporting requirements.

Key definitions (Sec. 117.281; Sec. 1715.51 amendments)

  • Non-private endowment fund: An endowment fund held by a non-private institution (a non-private endowment subcategory).
  • Non-private institution: An institution that is not a private institution, private college, or private university (includes entities under Chapter 1713 of the Revised Code).
  • Other terms align with existing law (institutional funds, endowment funds, donor-restricted funds, program-related assets, etc.).

Oversight, governance, and transfers (Sec. 1715.60–1715.66)

  • Donor oversight: Donors establishing a non-private endowment fund may appoint a representative to oversee use, management, investment, and appropriation (Sec. 1715.60).
  • Transfer restrictions: A donor-restricted non-private endowment fund may not be transferred between funds unless:
    • The gift instrument expressly permits it; OR
    • The establishing donor consents in writing; OR
    • The gift instrument is modified to permit transfers (Sec. 1715.61).
  • Public accounting for unrestricted funds: Non-private institutions may use non-donor-restricted funds at their discretion, but must publicly disclose a complete accounting of amounts expended and purposes (Sec. 1715.62).

Reporting requirements (Sec. 1715.63)

  • For donor-restricted non-private endowment funds with market value over $5 million, the institution must annually report to the Ohio Attorney General and the institution’s governing board, including:
    • Market value, asset allocation, spending policy, and spending rate
    • Annual appropriations and deficits
    • Material deviations from donor restrictions
    • Any suspensions or overrides of investment/spending policies
  • Reports begin January following the effective date.

Sustainability reviews (Sec. 1715.64)

  • Five-year sustainability reviews required for non-private endowment funds (notably those exceeding $5 million by threshold). Reviews must include:
    • Information from the annual report plus evaluation of fiduciary duties, donor intent, prudence, fund duration/preservation, purposes, economic conditions, inflation/deflation impact, expected returns, and investment policy.
  • Institutions must publicly retain the sustainability report (redacting confidential/personal data) and provide a written summary to the Attorney General.

Corrective action and modification possibilities (Sec. 1715.65–1715.69)

  • If sustainability concerns arise, the court can modify endowment obligations, restrictions, or charitable purposes to preserve the fund, to the extent practicable aligning with donor intent.
  • The Attorney General is a necessary party in such actions.
  • The Attorney General enforces these provisions and may require modifications and monitoring via corrective action plans, notices of noncompliance, and, if necessary, civil action.
  • Corrective action plans may require repayment of misused funds; noncompliant institutions may face court-ordered remedies, including injunctions and enhanced reporting.

Enforcement and applicability (Sec. 1715.66–1715.70)

  • The Attorney General has sole enforcement authority for Sections 1715.60–1715.71.
  • Notices of noncompliance require corrective action plans with specified deadlines (max 90 days to complete).
  • If a corrective plan is not completed within 120 days of a notice, the Attorney General may file a civil action for remedies.
  • The framework does not create criminal liability.
  • Provisions apply only to non-private endowment funds established on or after the bill’s effective date.

Recovery of public money (New provision across framework)

  • Expands existing framework to permit recovering public money deposited with tax-exempt organizations (covered organizations) that fail to comply with federal tax regulations and reporting requirements.
  • Requires timely notification to the Attorney General by the Auditor of State and outlines procedures for action if noncompliance is found.
  • Recovery actions are civil in nature and may be brought by the Auditor of State or the Attorney General, or by the Attorney General if the auditor fails to act within 120 days.
  • Applies to public money deposited on or after the bill’s effective date.

Applicability and sunset

  • The endowment fund provisions apply only to funds established on or after the bill’s effective date; existing endowment funds are exempt from these provisions.
  • The public money recovery provisions align with existing auditing and recovery authorities but extend them to tax-exempt covered organizations.

Fiscal and administrative notes

  • The bill includes a fiscal note (not provided here) and would expand regulatory oversight, reporting, and enforcement capacity of the Attorney General and related offices.

Timeline highlights

  • Effective date not specified in the text provided; annual reporting begins the first January after enactment for funds over $5 million.
  • First sustainability reviews begin January after effective date, with subsequent five-year intervals.

Compiled from official sources — confirm details with the bill’s official record.

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