Did a South Carolina charity own equipment a donor later claimed should be returned?

Plain-English summary

The Attorney General declined to decide whether equipment transferred to the charitable organization STARR legally belonged to it. The donor disputed ownership, and the office said it could not determine the transfer's facts in an opinion. It identified possible evidence, including transfer documents, any reversion language, and the donor's treatment of the gift for tax purposes, without deciding what those facts showed here.

The opinion explained that a charitable trust must protect property actually given to it for a charitable purpose. It said voluntarily returning such property could breach the organization's fiduciary duties. That statement depended on a valid charitable gift, which the office did not establish in this dispute.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the AG decide who owned the equipment given to STARR? A: No. The office said the disputed transfer facts were outside the scope of an Attorney General opinion.

Q: What facts did the opinion identify as relevant to the transfer? A: It mentioned documentation, any language allowing the property to return, and whether the donor had treated the transfer as a charitable gift.

Q: Could a charity simply return property that was truly given for charitable use? A: The opinion said a charitable trust had to protect such property and that willingly returning it could violate fiduciary duties.

Background and statutory framework

A House member asked about a donor's claim that equipment no longer legally belonged to STARR. The office declined to resolve ownership, then outlined South Carolina charitable trust principles and duties for property established as a gift.

Citations and references

The original opinion text below discusses S.C. Code Ann. § 1-7-130 and South Carolina Department of Mental Health v. McMaster, 372 S.C. 175, 642 S.E.2d 552 (2007).

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/january-11-2010/
• Original PDF: https://www.scag.gov/wp-content/uploads/2011/03/haley-n-r-os-9001-1-11-10-charitable-trust-STARR.pdf

Original opinion text

HENRY McMASTER

AIToRNEYGENERAL

January 11, 2010

The Honorable Nikki Randhawa Haley
Member, House of Representatives
320-D Blatt Building
Columbia, South Carolina 29211
Dear Representative Haley:

In a letter to this office you requested an opinion regarding a dispute between a nonprofit organization recognized as a charitable trust in this State, STARR, and a particular individual. The issue revolves around certain equipment donated to STARR by that individual where the individual who gave the equipment is now claiming that the equipment does not "legally belong" to STARR. As recognized by the State Supreme Court in EpworthChildren'sHome v. Beasley, 365 S.C. 157, 616 S.E.2d 710 (2005), quoting S.C. Code Ann.§ 1-7-130, the Attorney General is given the responsibility of assuring that a charitable trust is properly administered. However, in responding to your request for an opinion, this office has repeatedly stated that an opinion of this office cannot determine facts, noting that the determination of facts is beyond the scope of an opinion of this office. See: Ops. Atty. Gen. dated November 12, 2008; March 19, 2008; October 8, 2007. Therefore, any factual dispute as to whether certain equipment "legally belongs" to a nonprofit, charitable trust is beyond the scope of this opinion. While this office cannot make factual determinations in this instance, certain indicia that could be considered in making any such determination is, for example, whether an individual transferring the equipment did any acts typically utilized with respect to charitable gifts, such as claiming a charitable tax deduction, when the equipment was transferred to what I am assuming is a recognized 50l(C)(3) organization. Also, of course, any documentation involved in the transfer and whether such documentation contained any wording that would allow for a reversion of property would also have to be considered. While we cannot determine the particular facts regarding the equipment transfer in this instance, to be of assistance, I will outline certain basic principles regarding the laws of charitable trusts in South Carolina. As recognized by the Supreme Court in South Carolina Department of Mental Health v. McMaster, 372 S.C. 175, 180, 642 S.E.2d 552, 555 (2007), a charitable trust is defined as

REMBERT c. DENNIS Bu 1LDING •

PosT OFFICE Box 11549

• COLLIMBIA, SC 292ll-1549 •

TELEPHONE 803-734-3970

• FACSIMILB 803-253-6283

The Honorable Nikki Randhawa Haley
Page2
January 11, 2010

... [a] fiduciary relationship with respect to property ansmg as a result of a manifestation of an intention to create it, and subjecting the person by whom the property is held to equitable duties to deal with property for a charitable purpose ... The settlor must manifest an intention to create a charitable trust. It is not necessary that any particular words or conduct be manifest to create a trust, and it is possible to create a trust without using the words "trust" or "trustee". The Supreme Court also stated in Colin McK. Grant Home v. Medlock, 292 S.C. 466, 470, 349 S.E.2d 655, 657 (Ct.App. 1986) that charitable trusts " ... are entitled to peculiar favor; the courts will construe them to give them effect, if possible, to carry out the general intention of the donor." Moreover, " ... properties conveyed to a public charity are .. .impressed with a charitable trust." South Carolina Department of Mental Health, supra at 372 S.C.182, 642 S.E.2d 555. The Texas Attorney General in an opinion dated August 4, 1983 recognized that as to donations to charitable organizations, " ... a valid donation requires the donor to divest himself or herself of title and control of the gift without expectation of its return ... A charitable deduction, therefore, does not become a donation until it has been transferred to the particular charity." As similarly recognized by the Kentucky Attorney General in an opinion dated December 4, 1987,
[w ]hatever is done or given gratuitously in relief of the public burdens, or for the advancement of the public good, is a purely public charity. Where the public is the beneficiary, the charity is public, and where no private or pecuniary return is reserved to the giver or to any particular person, but all the benefit resulting from the gift or act goes to the public, it is a purely public charity; the word "purely'' being equivalent to "wholly." (emphasis added). In its decision in Adult Student Housing, Inc. v. State of Washington et al., 705 P .2d 793 at 797 (Wash. Ct. App. 1985), the Washington Court of Appeals stated that "[t]he term "charity'' in itself implies gift in some form; it implies the bestowal of goods or money, the rendition of services, or the awarding of privileges, free to the recipient, without gainful return or the anticipation of gainful return to the donors .... " It has also been recognized that if any general charitable intent is indicated, the courts will generally deny any right ofreverter. 38 A.LR. 44. As to any responsibilities of the Starr organization in this instance as to the property transferred, as stated at 15 Am. Jur. 2d Charities § 93,
[g]enerally speaking, the trustees of a charitable trust are under the duty of caring for and managing the property of the trust, and trust funds should be carefully guarded and protected, to the end that the charitable intent of the testator will be carried out and the trust property not depleted by being used for purposes not intended by the testator. In a charitable trust, the obligation of the trustee is to apply the trust res for some form of public benefit and the persons who receive its advantages from the

The Honorable Nikki Randhawa Haley
Page3
January 11, 2010

administration of the trust do so because they are conduits through whom the social gains flow, and not necessarily because they have a property interest in the trust assets. A charitable trust is a fiduciary relationship with respect to property, arising as a result of a manifestation of an intention to create it. and subjecting the person by whom the property is held to equitable duties to deal with the property for a charitable purpose. (emphasis added). Therefore, the STARR organization would have a duty to protect any property given to it, and to willingly transfer back property which was given for a charitable purpose could constitute a breach of its fiduciary responsibilities with respect to such property. With kind regards, I am, Very truly yours, Henry McMaster Attorney General

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By:

REVIEWED AND APPROVED BY:

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Robert D. Cook
Deputy Attorney General

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Charles H. Richardson
Senior Assistant Attorney General