Charities Chafe as State Laws Keep Endowments Off-Limits

Cash-strapped nonprofit groups in many states face a frustrating quandary as local laws prevent them from tapping endowments hit by the Wall Street slump, the Associated Press reports.

Two dozen states retain circa-1970s laws that prohibit charities from withdrawing from endowments that fall below the level of the gifts put into them, as has happened widely due to the stock-market plunge. The statutes were designed to keep nonprofit groups from exhausting the principal in their endowments.

“I don’t imagine the donors anticipated a situation where the market would fall so dramatically that the money would be held hostage,” said David Chambless, chief executive of the North Carolina Symphony, which is unable to touch its nearly $6.9-million endowment because of state laws.