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As Introduced
136th
General Assembly
Regular
Session
S. B. No. 12
2025-2026
Senators Wilson, Cirino
A
BILL
To
amend sections 1715.51, 3315.10, and 3315.41 and to enact sections
3314.55, 3315.43,
and
3326.53 of the Revised Code
to
permit community foundations to create component funds of any
charitable funds received by public schools and to classify some
funds held by a community foundation as institutional funds.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section
1.
That
sections 1715.51, 3315.10, and 3315.41 be amended and sections
3314.55, 3315.43,
and
3326.53 of the Revised Code be enacted to read as follows:
Sec.
1715.51.
As
used in sections 1715.51 to 1715.59 of the Revised Code:
(A)
"Charitable purpose" means any purpose the achievement of
which is beneficial to the community, including the relief of
poverty, the advancement of education or religion, the promotion of
health, and the promotion of a governmental purpose.
(B)
"Institution" means any of the following:
(1)
A person, other than an individual, organized and operated
exclusively for charitable purposes;
(2)
A governmental organization to the extent that it holds funds
exclusively for a charitable purpose;
(3)
A trust that had both charitable and noncharitable interests and the
noncharitable interests have terminated.
(C)
"Institutional fund" means a fund that is held by an
institution exclusively for charitable purposes.
"Institutional
(1)
Except as otherwise provided by division (C)(2) of this section,
"institutional
fund"
does not include any of the following:
(1)
Programrelated
(a)
Program-related
assets;
(2)
(b)
A
fund held for an institution by a trustee that is not an institution;
(3)
(c)
A
fund in which a beneficiary that is not an institution has an
interest other than an interest that may arise upon a violation of or
the failure of the purposes of the fund.
(2)
"Institutional fund" includes a fund held for an
institution by a community foundation pursuant to section 3314.55,
3315.43, or 3326.53 of the Revised Code.
(D)
"Endowment fund" means an institutional fund or any part
thereof that, under the terms of a gift instrument, is not wholly
expendable by the institution on a current basis. "Endowment
fund" does not include assets that an institution designates as
an endowment fund for its own use.
(E)
"Gift instrument" means a record or records, including an
institutional solicitation, under which property is granted to,
transferred to, or held by an institution as an institutional fund.
(F)
"Person" means an individual, corporation, business trust,
estate, trust, partnership, limited liability company, association,
joint venture, public corporation, governmental organization, or any
other legal or commercial entity.
(G)
"
Programrelated
Program-related
asset"
means an asset held by an institution primarily to accomplish a
charitable purpose of the institution and not primarily for
investment.
(H)
"Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
Sec.
3314.55.
(A)
For purposes of this section, "community foundation" has
the same meaning as in section 3315.43 of the Revised Code.
(B)
The governing authority of a community school may use a community
foundation to create a component fund of any gift or endowment of
intangible personal property made by grant, devise, or bequest, or in
any other manner, including any of the following:
(1)
Charitable funds received or created by the community school;
(2)
Institutional or endowment funds related to the community school
received or created pursuant to sections 1715.51 to 1715.59 of the
Revised Code.
(C)
Any designation made pursuant to this section remains subject to any
conditions and limitations to which the original gift or endowment
was subject, or to which the original institutional or endowment fund
was subject as described in sections 1715.51 to 1715.59 of the
Revised Code.
(D)
A community foundation that creates a component fund in accordance
with this section shall return the property to the community school
if any of the following circumstances exist:
(1)
The community foundation no longer satisfies one or more of the
criteria described in division (A) of section 3315.43 of the Revised
Code.
(2)
The community foundation is liquidated.
(3)
The community foundation substantially violates any condition,
limitation, or requirement imposed on the property.
Sec.
3315.10.
The
custody, management, and administration of all estates or funds,
given or transferred in trust to any municipal corporation for the
promotion of education, and accepted by the council thereof, and any
institution for the promotion of education so founded, other than a
university, shall be committed to, and exercised by, the board of
education of the school district including such municipal
corporation.
Such
Except
as provided in section 3315.43 of the Revised Code, such
board
shall be the representative and trustee of such municipal corporation
in the management and control of such estates and funds so held in
trust and in the administration of such institution, excepting funds
and estates held by any municipal corporation which are used to
maintain a university.
For
the uses and purposes of such board in administering the trusts, the
council of such municipal corporation annually may levy taxes on all
the taxable property of such municipal corporation to the amount of
three tenths of one mill on the dollar valuation thereof.
Sec.
3315.41.
A
board of education may create a trust
or
community foundation component fund
for
investment of money in the education foundation fund created pursuant
to section 3315.40 of the Revised Code. The instrument creating such
a trust shall do all of
the
following:
(A)
Appoint a nonprofit foundation that is exempt from income tax under
section 501(a) of the "Internal Revenue Code of 1986," 100
Stat. 2085, 26 U.S.C. 501(a), as amended, and that is described in
section 501(c)(3) of the "Internal Revenue Code of 1986,"
100 Stat. 2085, 26 U.S.C. 501(c)(3), as amended,
as trustee
including a community foundation as defined in section 3315.43 of the
Revised Code
;
designate the school district education foundation fund as the
beneficiary; and describe the initial trust principal, which shall
not be less than one dollar;
(B)
Specify that additional amounts may be added to the trust
or
component fund
principal
from the education foundation fund;
(C)
Prohibit invasion of the principal of the trust
or component fund
;
(D)
Require the
trustee
nonprofit
foundation
to
administer the trust
or component fund
,
including but not limited to, holding, investing, and reinvesting the
trust
or
component fund
principal;
collecting the income from the investments; and, after deducting the
costs of administering the trust
or component fund
and, if applicable, the
trustee's
nonprofit
foundation's
compensation,
paying the net income to the school district treasurer for payment
into the school district education foundation fund as beneficiary;
(E)
Specify the conditions under which the trust
or
component fund
is
revocable. Upon revocation, the principal of the trust
or
component fund
shall
revert to the board of education.
(F)
Provide for amendment of the trust
or component fund
if the board concludes that an amendment will better enable the
objectives of the trust
or
component fund
to
be achieved;
(G)
Other provisions the board considers necessary or advisable for
successful administration of the trust
or component fund
and achievement of its objectives.
The
board may provide for the payment, from the trust
or component fund
income or otherwise, of a reasonable fee to the
trustee
nonprofit
foundation
in
compensation for its services.
If
the principal of the trust
or
component fund
created
under this section reverts to the board of education the board shall
direct the school district treasurer to accept and pay the principal
into the education foundation fund created under section 3315.40 of
the Revised Code.
Unless
provided otherwise in the trust
or
component fund
instrument,
a trust
or component fund
created under this section is not subject to Chapter 135. of the
Revised Code and shall not be considered a charitable trust under
sections 109.23 to 109.33 or Chapter 1719. of the Revised Code.
For
purposes of this section, "component fund" means an
individual fund considered by the internal revenue service to be part
of the exempt assets of a foundation, under which the foundation's
governing board has total control over all assets of the fund.
Sec.
3315.43.
(A)
As used in this chapter, "community foundation" means a
foundation that meets all of the following criteria:
(1)
The foundation is a nonprofit corporation organized under Chapter
1702. of the Revised Code.
(2)
The foundation supports a specific and defined geographical area,
including by doing either or both of the following:
(a)
Facilitating and pooling donations, including those from individuals,
families, businesses, and state or federal grants, to address
community needs and supporting local nonprofit corporations and
educational institutions;
(b)
Providing grants, including donor-advised funds, endowments,
scholarships, field-of-interest funds, and giving circles.
(3)
The foundation is exempt from federal income taxation under 26 U.S.C.
170(b)(1)(A)(vi) and 501(c)(3).
(4)
The foundation is further described in 26 C.F.R. 1.170A-9(10) and
(11).
(5)
The foundation publishes at least annually and circulates widely
within its community an audited report of its fund balances,
activities, and donors.
(B)
A school district board of education may adopt a resolution to
designate a community foundation to create a component fund of any
gift or endowment of intangible personal property made by grant,
devise, or bequest, or in any other manner, or any proceeds from any
gift or endowment, including any of the following:
(1)
Charitable funds received or created pursuant to sections 3313.17,
3315.10, 3315.41, and 3375.151 of the Revised Code;
(2)
Institutional or endowment funds related to the school district
received or created pursuant to sections 1715.51 to 1715.59 of the
Revised Code.
(C)
Any designation made pursuant to this section remains subject to any
conditions and limitations to which the original gift or endowment
was subject as described in division (A) of section 3313.36 of the
Revised Code, or to which the original institutional or endowment
fund was subject as described in sections 1715.51 to 1715.59 of the
Revised Code.
(D)
A community foundation that creates a component fund in accordance
with this section shall return the property to the school district if
any of the following circumstances exist:
(1)
The community foundation no longer satisfies one or more of the
criteria described in division (A) of this section.
(2)
The community foundation is liquidated.
(3)
The community foundation substantially violates any condition,
limitation, or requirement imposed on the property.
Sec.
3326.53.
(A)
For purposes of this section, "community foundation" has
the same meaning as in section 3315.43 of the Revised Code.
(B)
The governing body of a STEM school that is not governed by a school
district under section 3326.51 of the Revised Code may use a
community foundation to create a component fund of any gift or
endowment of intangible personal property made by grant, devise, or
bequest, or in any other manner, including any of the following:
(1)
Charitable funds received or created by the STEM school;
(2)
Institutional or endowment funds related to the STEM school received
or created pursuant to sections 1715.51 to 1715.59 of the Revised
Code.
(C)
Any designation made pursuant to this section remains subject to any
conditions and limitations to which the original gift or endowment
was subject, or to which the original institutional or endowment fund
was subject as described in sections 1715.51 to 1715.59 of the
Revised Code.
(D)
A community foundation that creates a component fund in accordance
with this section shall return the property to the STEM school if any
of the following circumstances exist:
(1)
The community foundation no longer satisfies one or more of the
criteria described in division (A) of section 3315.43 of the Revised
Code.
(2)
The community foundation is liquidated.
(3)
The community foundation substantially violates any condition,
limitation, or requirement imposed on the property.
Section
2.
That
existing sections 1715.51, 3315.10, and 3315.41 of the Revised Code
are hereby repealed.