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CS Professional · CSR and Social Governance · Contribution of Non-Corporate Entities in Social Governance

A family foundation, Sundaram Foundation, receives a large gift from a donor with the condition that it be used only for rural sanitation. The trustees consider using part of it for urban library building because the library need is more pressing. As adviser, what should you state?

The restricted gift must be used only for rural sanitation unless the donor agrees to a change or a legally permitted variation is obtained. Trustees hold funds in a fiduciary capacity, so urgency of another cause or internal minutes cannot override the donor's condition.

  1. AThe trustees may divert it freely since the foundation is autonomous
  2. BThe restricted gift must be applied to the stated purpose unless the donor consents or a legally permitted variation is obtainedCorrect
  3. CThe gift lapses and must be returned to the government
  4. DThe trustees may divert half provided they record it in minutes

Explanation

Restricted donations create a duty to use funds for the stated purpose; trustees hold them in fiduciary capacity. Departure requires donor consent or lawful variation. Internal minutes cannot override the condition, and there is no automatic lapse to government.

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