Disclosure Requirements for Charitable Funds with Comingled Assets

In December 1995, Congress passed the Philanthropy Protection Act of 1995 (the PPA), which clarifies the federal and state securities law registration and disclosure responsibilities of charities managing funds that commingle split interest charitable gifts. In summary, the PPA (i) confirms that charitable funds and the interests in such funds created by the donations of various split interest charitable gifts are excluded from state and SEC registration requirements; and (ii) requires charitable organizations maintaining funds in which donors retain a current or residual interest, which commingle assets for purposes of collective investment, to provide written disclosure to donors describing the material terms of the operation of any such collective investment fund. The disclosure must be made to donors at the time of donation. The PPA specifically does not provide exemptions from the anti-fraud provisions of the federal and state securities laws, however. Thus, federal and state anti-fraud rules continue to apply with regard to all the Exempt Funds.

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