June 28.2000 

Ms. Kathryn A. Yeager 

Chair, Board of Regents 

Midwestern State University 

3410 Tat? Boulevard 

Wichita Falls, Texas 76308-2099 

Opinion No. JC-0240 

Re: Whether donated endowment and 

scholarship funds may be transferred from the 

control of a university to that of its private 

foundation (RQ-0178-JC) 

Dear Ms. Yeager: 

You have asked this office whether and how certain funds donated to Midwestern State 

University (the “University”) for the purposes of faculty endowment and scholarships may be 

transferred from the control ofthe University to that of a private foundation which, as we understand 

it, exists to benefit the University. As you explain it, “The proposed shift of funds would be made 

with the agreed provision that there would be no difference in purpose with regard to the use of the 

funds.” Letter from Louis J. Rodriguez, President, Midwestern State University, to Honorable John 

Comyn, Attorney General of Texas (Jan. 28,200O) (on file with Opinion Committee) (hereinafter 

“Request Letter”). 

We note at the outset that our response will ofnecessity be general in nature, relying on your 

representations concerning matters of fact with regard to these donations. We do not decide matters 

of fact in the opinion process. See Tex. Att’y Gen. Op. Nos. JC-0020 (1999) at 2, M-187 (1968) at 

3,0-29 ll(l940) at 2. Accordingly, to the extent that an understanding ofthese particular gifts, their 

status, and the donor’s intent with regard to them would require fact-based inquiry, we can give 

advice only concerning the legal issues, taking the facts as you give them to us. 

As you explain it, certain funds were given to Midwestern State University, apparently for 

the purposes of faculty endowment and student scholarships, with the “expressed. . preference that 

the funds be managed by Midwestern State University, rather than its foundation.” Request Letter, 

supra, at 1. Because you and the donor appear to believe that the Public Funds Investment Act 

restricts certain investments of these funds, but see Tex. Att’y Gen. Op. No. DM-489 (1998) 

(defining “public funds” subject to act), the donor “has now expressed a changed preference that the 

funds be managed by the University foundation, rather than the University.” Request Letter, supra, 

at 1. You do not suggest that the gift of these funds was a revocable trust, and for the sake of the 

analysis we will presume that such is not the case. 
Ms. Kathryn A. Yeager - Page 2 (JC-0240) 

You ask us first to consider the possible applicability of two recent opinions of this 

office, Attorney General Opinions JC-0138 (1999) and JC-0146 (1999). Attorney General Opinion 

JC-0138 concerned whether a public junior college could transfer funds donated by a private donor 

to a nonprofit foundation “created exclusively for charitable and educational purposes in providing 

support for the specific College seeking to transfer the funds.” Tex. Att’y Gen. Op. No. JC-0138 

(1999) at 1. Attorney General Opinion JC-0146, on the other hand, concerned whether a state 

university could transfer legislatively appropriated funds to a private, out-of-state endowment. We 

agree that the factual situation your letter describes, one in which you seek to transfer funds granted 

to Midwestern State by a private donor for restricted purposes from the control of the university’s 

regents to those of the foundation allied with the university, is essentially the same as, and is 

therefore governed by Attorney General Opinion JC-0138. 

You next ask, if “the funds described in this request are not general funds but funds 

impressed with a charitable trust. whether the transfer could be done by written agreement, or if 

the judicial proceedings suggested by JC-0138 must be followed.” Request Letter, supva, at 1. 

As we understand your description of the funds in question, they were given for restricted 

purposes and are not general funds of the university. In Attorney General Opinion JC-0138, we 

explained that “Restricted funds such as these are impressed with a charitable trust; the college’s 

legal title to them is subject to an inalienable beneficial interest.” Tex. Att’y Gen. Op. No. JC-0138 

(1999) at 3. 

Generally, the method by which such a trust may be modified is that set forth in section 

112.054 of the Property Code, pursuant to which a court of competent jurisdiction must be shown 

that “because of circumstances not known to or anticipated by the settlor, compliance with the terms 

of the trust would defeat or substantially impair the accomplishment of the purposes of the trust.” 

TEX. PROP. CODE ANN. $ 112,054(a)(2) (V emon 1995). The remedy sought would be analogous to 

that described in Attorney General Opinion JC-0138. That is, the regents of Midwestern State 

University, who pursuant to section 103.08 of the Education Code are to administer such funds as 

these, would petition the court to substitute for them “the trustees of a nonprofit corporation created 

to provide support to the college in question . . .” Tex Att’y Gen. Op. No. JC-0138 (1999) at 4. 

Because this office represents the public interest in charitable trusts, “the attorney general is a proper 

party and may intervene in a proceeding” such as this. TEX. PROP. CODE ANN. $123.002 (Vernon 

1995). Notice of such a proceeding is to be given this offtce “by sending to the attorney general, by 

registered or certified mail, a certified copy of the petition or other instrument initiating the party’s 

involvement in the proceeding.” Id. $ 123.003(a) (Vernon Supp. 2000). 
Ms. Kathryn A. Yeager - Page 3 (JC-0240) 

SUMMARY 

A gift of timds to a state university for a restricted purpose is 

impressed with a charitable trust. In order to modify such a trust, the 

university’s regents must petition a court of competent jurisdiction 

for such a modification. The Office of the Attorney General, which 

represents the public interest in charitable trusts, is a proper party to 

such a proceeding, and should be given notice in the manner 

prescribed by section 123.003(a) of the Property Code. 

Yo s ve truly, 4Jvi-T 

JOI\IN CORNYN 

Attorney General of Texas 

ANDY TAYLOR 

First Assistant Attorney General 

CLARK KENT ERVIN 

Deputy Attorney General - General Counsel 

ELIZABETH ROBINSON 

Chair, Opinion Committee 

James E. Tourtelott 

Assistant Attorney General - Opinion Committee