QIM 32 | Nonprofit Law | Law Desk

Ava: Michael, if I donate money "for scholarships" or "to build the shelter," can the charity just spend it on something else?

Michael Benavides, Esq.: Generally, no. When a donor attaches a restriction to a gift — in what the law calls a gift instrument — the charity is expected to honor it. A restricted gift has to be used for the designated purpose; it isn't just a suggestion. In California, donor-restricted funds are treated as institutional funds under UPMIFA, the Uniform Prudent Management of Institutional Funds Act, codified at Probate Code sections 18501 to 18510.

Ava: So what happens if the purpose becomes impossible — the program ends, the need disappears?

Michael Benavides, Esq.: The charity can't just unilaterally repurpose the money. Under UPMIFA, if a restriction becomes unlawful, impracticable, impossible to achieve, or wasteful, the organization has to involve the Attorney General — and often a court — to modify or release it. In fact the Attorney General must be a party to a court proceeding to release a restriction, and the organization has to give the AG notice and an opportunity to be heard. Donor intent is protected by design.

Ava: Does the donor themselves have any say later?

Michael Benavides, Esq.: Sometimes a restriction can be released with the donor's consent, and the gift instrument's own terms matter a great deal. But a donor generally can't force day-to-day management decisions — the enforcement muscle sits with the Attorney General, who represents the public interest in charitable gifts.

Ava: Practical takeaway for donors and charities?

Michael Benavides, Esq.: Donors: put the restriction in writing, clearly. Charities: track restricted funds separately and don't dip into them for general operations. Honest caveat: whether a gift is truly "restricted," and what it takes to modify it, turns on the exact gift language and the facts — so both sides benefit from getting it documented up front.

Talk it through with Law Desk. If a restricted gift is being misused — or a charity needs to modify a restriction the right way — a California attorney can navigate the UPMIFA and Attorney General process. Schedule a consultation with Michael Benavides, Esq.

Disclaimer

Attorney advertising. General information about California charitable-gift law, not legal advice; reading it creates no attorney-client relationship. Gift-restriction questions are highly fact-specific and depend on the gift instrument; statutes change and are applied differently to different facts — confirm the current rules with a licensed California attorney before acting. Michael Benavides, Esq. — California State Bar No. 270714 — is the only licensed attorney and the source of every legal statement here. Ava Benavides is an editorial brand voice, not an attorney, and does not give legal advice in her own name.