As Introduced

136th General Assembly

Regular Session S. B. No. 12

2025-2026

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;

(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.

(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.