Weakened Oversight of Public Assets

New legislation is dismantling century old trusts and endowments that were supposed to continue in perpetuity. This is the raiding and plundering of historic endowments to compensate for property mortgages, pet projects, failed investments and expanded personal compensation packages, which are not for the benefit of the public and certainly not the donors' intent.

In 2006,the Uniform Law Commission (ULC) released Bush era guidelines deregulating a substantial portion of nonprofit funds. More than 40 states have adopted versions of these guidelines with very little debate and even less publicity. On June 10, 2009, NJ Governor Jon Corzine signed into law the Uniform Prudent Management of Institutional Funds Act. This law creates troubling changes in the way that charitable trusts and endowments are managed and regulated.

The use of the term "prudent" in dealing with "small funds" has resulted in an expansion of the affected funds from the ULC suggested amount of $25,000 to a high of $250,000 in New Jersey and in a number of other States. These funds become "old" after the suggested 20 years in NJ, and at least one \state has shortened the time to 10 years. Language on retroactivity is strategically vague and neglects public notification and transparency.

Liquidating the principal in countless smaller endowments that support charitable work in good times and bad will do irreparable harm to the public good that will eventually achieve infamy as a crime against the living as well as the dead.

Most significant is the transfer of oversight from the jurisdiction of the States' Courts to a political appointee - the State Attorney General - making nonprofits more vulnerable to pay-to-play and unregulated asset transfers. Ethical assumptions about prudence, motives, and human nature have subsequently been changed with lessons learned by the banking crisis, predatory lending practices, bonuses amidst bailouts and the failure of the SEC to regulate the exploitation of foundations and non-profits by Madoff.

The dismantling of New Jersey hospitals, specifically Muhlenberg Regional Medical Center, Plainfield, NJ, was facilitated by a corporate, non-profit parent company with related for-profit holdings and overlapping interests. The transfer of over a century's accumulation of assets: endowments, gifts, real estate, facilities, and equipment was done under the approval of the NJ State Government, and the NJ Attorney General's Office. The cy pres doctrine was essentially ignored.

Citizens have raised the endowment issue at state hearings, in letters to the editor, and various other venues, but all of this has fallen on deaf ears. The citizens are in affect paying tax dollars to the same state government employees who are not protecting their interests. Unless the citizen's can muster enough money to initiate a court action, all of the historic endowments will be lost forever, and a crime against the dead will have occurred. In this case, the NJ UPMIFA of 2009 had not yet been passed, but the raiding and plundering of endowments happened anyway.