December 16, 1999 | Read Time: 1 minute
Ohio charities are expected to benefit from a new state law that widens the investment options for assets held in trust for non-profit groups.
The statute, which may be one of the first of its kind in the country, frees third-party trustees — such as banks — from limiting to interest and dividends the trust-fund income they are required to pay charities. As a result, trustees will no longer feel compelled to put most of the funds in bonds and other investments that insure specific returns. Because the law allows payments to be made based on the appreciation of the trust’s total assets, trustees will have more leeway to buy stocks, which have more-favorable growth prospects than do other investments. For charities, the change means a better chance of seeing money in the trusts grow.
The new law, called the Institutional Trust Funds Act, puts third-party trusts held for the benefit of a charity on a par with trusts held by charities themselves. Unless specifically restricted by donors, charity-held trusts have been allowed by law to spend not only interest and dividends but also draw from appreciated values.
Unlike charity-held trusts, however, the third-party trusts can still pay out to charities only a limited proportion of the trusts’ assets.
