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Bar Journal - Spring 2004

Charitable Trust Units



The Charitable Trusts Unit is now marking its 61st anniversary (1943-2004). In 1943, Attorney General Frank Kenison established the Charitable Trusts Unit within the Attorney Generalís Office to deal with growing abuses in the charitable sector. By 2003, a majority of other states had adopted laws similar to those in New Hampshire regarding the administration and enforcement of charitable trusts. New Hampshire, thus, became the first state not only to create a structure for oversight of charitable trusts but to also codify the Attorney Generalís common law jurisdiction over charitable trusts.1

Since 1997, the Legislature in New Hampshire has enacted new statutory mandates for the Charitable Trusts Unit, including specific statutes dealing with (a) conflicts-of-interest, (b) sales of nonprofit hospitals, and (c) community benefits, among others.2

The mission of the Charitable Trusts Unit is to protect the integrity of the charitable sector in the State of New Hampshire through effective registration, licensing, education, and enforcement, while supporting the charitable sectorís growth and diversity. The Unit also serves as a central repository for the collection of information concerning charitable organizations, thereby allowing the general public, potential donors and other citizens to access information and empowering them to make responsible decisions.


Since the early 1990ís, the number of charities registering with the Unit has increased substantially. In June 30, 2003, the total number of charitable trusts registered in New Hampshire was 5,163, the highest number of charitable trusts ever registered in this state. During fiscal year2003, approximately 593 new charitable entities were registered; and during fiscal year 2002, approximately 383 new charitable entities were registered.

In 2001, the Charitable Trusts Unit attempted to determine the value of all the charitable entities registered in New Hampshire. Using federal tax data, the Unit estimated that the total aggregate value of registered charities native to New Hampshire was approximately $8.2 billion dollars for the fiscal year ending June 30, 2000. The value of the assets of religious organizations was excluded from this calculation, since churches, synagogues and mosques do not register with the Attorney Generalís Office. Taken as a whole, $8.2 billion is a remarkable testament to the charitable giving practices of New Hampshire citizens.3

In recent years, however, the value of charitable assets held by New Hampshire charitable entities has declined as the securities markets have suffered sustained losses.4 Of equal significance is the fact that contributions to charities from private donors has declined for the first time in a decade, dropping by 1.2% in 2002 - in contrast to the steady increase in charitable donations during the 1990ís.5 New Hampshire charities are now caught in a difficult cycle. With fewer dollars to distribute, many have made both cuts in programs as well as staffs.6

Recent Transactions. Since 1997, the Charitable Trusts Unit has dealt with a series of diverse nonprofit matters. These transactions include (a) the merger of two of New Hampshireís nonprofit hospitals (Lakes Region Hospital and Franklin Hospital); (b) the sale of the nonprofit Blue Cross Blue Shield Plan; (c) the conveying of the proceeds of the Blue Cross sale ($87,000,000) to a new foundation (the Endowment for Health); (d) the closing of a major nonprofit nursing home (the Gale Home) and the creation of a new foundation for destitute and elderly women in Manchester with the proceeds of that transaction ($9,000,000); (e) the implementation of the community benefits statute requiring nonprofit health care trusts to report what community benefits they provide to their communities in exchange for the tax exemptions they receive (RSA 7:32 et seq.), (f) cooperation with the Department of Health and Human Services and the Department of Insurance with respect to health care issues; and (g) cooperation with the Legislature on issues ranging from telemarketing fraud to gift annuities.

In 2003, the Charitable Trusts Unit assisted Governor Benson in the establishment of a new charity Ė the Old Man of the Mountain Revitalization Fund, Inc. Ė to raise funds to commemorate the loss of the Old Man of the Mountain, an important symbol of New Hampshire. The Unit provided technical assistance to both the Revitalization Fund and the Old Man of the Mountain Task Force.

Creating New Health Foundations

Three major new health foundations have been created in New Hampshire since 1999 as a result of the sale of nonprofit entities. The Charitable Trusts Unit played a major role in each of these transactions. At the time of their organization, these entities held approximately $109,000,000 in assets:

Healthy NH Foundation
Endowment for Health
Gale Foundation

Year Created/Assets
1997 $12,000,000
2000 $87,000,000
2002 $10,000,000

childrenís health insurance
statewide health issues
elderly and destitute women

Nationally, over 160 new health foundations have been created from the conversions or sales of nonprofit hospitals and Blue Cross Blue Shield Plans. These new foundations currently have in excess of $16 billion in assets;7 and the charitable assets held by these foundations must be used for healthcare purposes. In creating these new foundations, state Attorneys General have wrestled with issues of community involvement, accountability, and the fiduciary duties of governing boards.


The Unit cooperates actively with charitable trust units in other state Attorneys Generalís offices on multi-state initiatives. In 2003, the Unit joined other state Attorneys General in preparing and filing an amicus brief in the landmark telemarketing case, Madigan v. Telemarketing Associates Inc., which was argued before the United States Supreme Court in March 2003. In that case, the U.S. Supreme Court unanimously upheld the right of the state Attorneys General to proceed against telemarketing companies engaging in fraudulent charitable solicitations. Since that decision, the Unit has successfully brought actions and settled litigation with a variety of telemarketing companies based upon their failure to comply with New Hampshire charitable trusts laws.

In 1996, the Unit analyzed its data and determined that seventy-five percent (75%) of all charitable donations made by New Hampshire citizens through professional telemarketers went not to the charity involved but rather to the for-profit telemarketer.8 Many of the professional telemarketers were organized and operated outside of New Hampshire, with the funds passing from New Hampshire into other states. Approximately twenty-five percent (25%) of the charitable donations remained with the charitable entity in New Hampshire. These percentages have been consistent with the findings of Attorneys General in other states.

The Charitable Trusts Unit again conducted a statistical review of the 2002 charitable campaigns conducted in New Hampshire and the same approximate percentages continue to apply. In order to combat telemarketing fraud, the Unit issues press advisories, cooperates with the chiefs of police and distributes copies of its guidelines for making donations to both citizens and charitable entities. The Unit also cooperates with Attorneys General in other states and with the National Association of State Charities Officials (NASCO) in sharing information on telemarketing activity Ė and the use of the Internet in soliciting charitable funds.9


Under New Hampshire law, the Director of Charitable Trusts is a necessary party to all actions filed in the Stateís Probate Courts and Superior Courts dealing with a broad range of issues: from testamentary trusts to nonprofit healthcare consolidations; from issues involving excessive fees to breaches of fiduciary duties; from telemarketing fraud to issues raised in the annual financial disclosures (Form 990), and for all those statutory responsibilities more fully discussed below. The Charitable Trusts Unit is now staffed with one attorney (the Director of Charitable Trusts), one registrar, one paralegal, one administrative assistant and one records control clerk.

The Unit and the Director of Charitable Trusts (the "Director") continued their commitment to educating the charitable sector on major new issues.10 The Unit has engaged the public in a variety of ways, including: (a) educational sessions for those specializing in nonprofit issues organized by the New Hampshire Bar Association and other groups; (b) annual workshops for the trustees of the 264 cities and towns in New Hampshire; and (c) articles published in the New Hampshire Bar Journal. 11

The major concerns of the Charitable Trusts Unit continue to be fiduciary duties and responsibilities of nonprofit governing boards, compliance with the conflict-of-interest statutes in this state, and the education of newly appointed members of nonprofit boards.


The laws governing charitable trusts in New Hampshire are complex and the following chart is a general schematic representation of some, but not all, of the major laws:

The Unit supervises charitable trusts and charitable solicitations through a registration and annual reporting system. Thus, every registered charitable trust must file annual reports with the Unit for the charitable funds that they hold and administer. Included in the materials that must be filed is a statement on conflicts of interest, the prohibition on loans to officers and directors, and other prohibited pecuniary benefits.12 In general, the Director of Charitable Trusts is responsible for the supervision, administration and enforcement of charitable trusts, charitable solicitations and charitable sales promotions.

In terms of statutory mandates and statutory duties, the principal functions of the Unit include:

  • Supervision and enforcement of charitable trusts in New Hampshire under statutory and common law;
  • Enforcement of the conflict of interest law (RSA 7:19-a);
  • Review all healthcare acquisitions involving nonprofit institutions in this state (RSA 7:19-b);
  • Licensing of professional fundraisers (RSA 7:28) and enforcement of games of chance (RSA 287-D);
  • Monitoring the issuance of charitable gift annuities (RSA 403-E);
  • Appearing in Probate Court and Superior Court as a necessary party to all cases involving charitable trusts, including, but not limited to, petitions for cy pres and petitions for removal of trustees;
  • Cooperating with the Sweepstakes Commission in enforcing the gaming laws relating to Bingo and Lucky 7ís;
  • Cooperating with the Criminal Bureau in investigating allegations of criminal activities by officers and directors of charitable trusts;
  • Cooperating with the Department of Revenue Administration to enforce the laws regarding library trustees, cemetery trustees and trustees of trust funds.


The Legislature has mandated that the Charitable Trusts Unit work on a variety of issues affecting the charitable sector in New Hampshire, including participation in a study committee dealing with the tax-exempt status of nonprofit hospitals. The Director is also involved in a drafting committee convened to prepare the Uniform Trust Code for adoption in New Hampshire in the current legislative session (2003-2004). Two statutes were enacted in the late 1990ís by the Legislature that merit special comment: (a) the community benefits statute and (b) the conflicts of interest statute.

Community Benefits. The community benefits statute was enacted in 1999 after extensive research and testimony in both the Senate and the House of Representatives. In brief, that statute requires that all nonprofit health entities (such as nonprofit hospitals) file annual statements with the Attorney Generalís Office setting forth what "community benefits" are offered in the community served by the nonprofit health entity (RSA 7:32 et seq).

As a result of that statute, nonprofit hospitals and others have posted on their Web sites information about programs offered and populations served by these entities. In addition, the filings made with the Attorney Generalís Office contain information on the healthcare needs of each community served and the plan for addressing those needs. The statute also requires the nonprofit entities to consult with community groups and public officials in determining how to best meet the needs of the community. The statute has led to the formation of collaborations among nonprofit entities in many communities in New Hampshire, including the Upper Valley.

Conflicts of interest. Conflicts of interest remain a major concern nation-wide for nonprofit institutions, the donors that contribute to those institutions and the agencies that regulate them. In 1997, the New Hampshire Legislature thoroughly revised the laws governing conflicts of interest in New Hampshire relating to charitable entities (RSA 7:19-a). Briefly, the Legislature enacted a statute that prohibits loans being made by a charity to either an officer or director of the charity. The Legislature also created a high standard for board approval of any contracts involving a board member (a two-thirds vote of independent directors is required) and a very public disclosure policy for contracts involving board members. That disclosure policy requires the publication of a legal notice whenever a board member receives, directly or indirectly, a contract with a financial benefit exceeding $5,000.

The Charitable Trusts Unit requires every charitable entity registering with it to complete a conflicts statement that asks about conflicts of interest policies and about loans and contracts involving officers and directors, among other items. This statute has been in effect for approximately six years and has worked well in raising the bar on conflicts of interest.


One of the Unitís major goals is to achieve direct, immediate access by the general public to documents filed by New Hampshire charities with the Unit. As a first step, the Unit created an active Web site where citizens can access and download statutes, filing forms, and a broad range of information on the charitable sector. ( The Web site also contains links to other state and federal agencies that deal with charitable trusts and to other sites. The purpose of the Web site is (a) to assist New Hampshire citizens in making informed decisions about their charitable dollars and to (b) encourage greater accountability and transparency by the charitable entities themselves. The Unit is now reconfiguring that Web site for easier access by New Hampshire citizens.

In 2001, a professional consulting firm was hired to review the operations, efficiency and structure of the Unit. That professional consulting firm concluded that the Unit operated very efficiently and very effectively and it pointed to electronic filing (e-government) as the next step in dealing with the increasing number of charities registering with the Attorney Generalís Office. The Unit has been cooperating with the New Hampshire Office of Information Technology and the Urban Institute and its electronic filing project in order to implement an electronic filing program in New Hampshire.

Major Transactions

One of the major trends in the charitable sector is the restructuring of certain nonprofit health facilities, including nonprofit hospitals and nonprofit insurers. The Unit devoted substantial resources during the past three years to a number of charitable entities that were attempting to restructure their organizations, including the merger of the Lakes Region and Franklin Hospitals, the proposed affiliations of the New London Hospital with Mary Hitchcock Memorial Hospital and Dartmouth-Hitchcock Clinic, and a proposed affiliation between Valley Regional Healthcare, Inc, and the Dartmouth-Hitchcock Alliance. These transactions are time-sensitive and are often the direct result of pressures operating upon the healthcare sector nationally as well as regionally.

The Unit has appeared as a necessary party in the 10 Probate Courts in New Hampshire on a variety of other charitable trust issues. Many of these involved novel or significant issues, requiring cy pres decisions by the Probate Courts. These cases included the New Hampshire Amateur Athletic Union. In that situation, through cooperation with the United States Attorney, the FBI, the State Police, and Gaming Enforcement, the executive director of the organization was tried, convicted, and incarcerated for the misuse of charitable funds. In addition, the Unit continues to be involved in cases involving breaches of statutes by charitable fundraisers under charitable trusts law. The Unit is currently involved in the proposed sale and cy pres of the Bishopís Residence in Manchester, New Hampshire. In that case, property was given by the former Mayor of Manchester (Mayor Trudel), to be used "forever" as the residence of the Bishop of Manchester.

Public Outreach, Public Education

To achieve its goal of increased public awareness, the Unit has issued press releases, participated in television and radio interviews, placed its Directory of Charitable Funds in New Hampshire on its web page, and appeared before nonprofit organizations and professional groups. As indicated earlier, the Unit has kept the information on its page current (

One of the resources available on the Web site is The Directory of Charitable Funds in New Hampshire. Also found on the Web site are (a) the documents creating the Endowment for Health, (b) a community benefits guidebook, (c) the guidebook for directors and officers of New Hampshire Charitable Trusts, and d) the Optima Health Report, among others.

That Directory lists all the foundations in New Hampshire that make grants, together with the name of the executive officer and contact information for those citizens wishing additional information. The Unit has also posted the forms used by charities and professional fundraisers in registering and reporting, and the forms necessary to comply with the requirements of RSA 287-D and RSA 403-E. There are links to the Secretary of State, the Internal Revenue Service, and to other sites of interest to the charitable sector.


  1. These states include New York, Massachusetts, Oregon, Washington, Ohio, Texas, and Connecticut, among others. In the Commonwealth of Pennsylvania, there are two Directors of Charitable Trusts, one in the Attorney Generalís Office and one in the Office of the Secretary of State.
  2. See, New Hampshire RSA 7:19-a (conflicts-of-interest), RSA 7:19-b (sales of nonprofit health facilities), and RSA 7:32-c et seq. (community benefits).
  3. The Unit used the Forms 990 that disclose the value of securities and property held by registered charities in New Hampshire. Since 2001, the value of securities held by charitable entities has declined.
  4. From its peak in the 1990ís until December 2002, the Standard and Poor Index fell by 40%, while the value of the NASDAQ Composite Index fell a staggering 70%. See <>
  5. See, the San Francico Chronicle ("Coping in tight times: Nonprofits face higher scrutiny, lower donations," November 3, 2003).
  6. David Callahan, "Hard Times Hit Charities, too," "The Christian Science Monitor," April 22, 2003. New Hampshire Catholic Charities announced its decision to down-size its staff due to reduced donations. See, the "Manchester Union Leader," April 11, 2003, page A1. Also, see Jacqueline L. Salmon, "Sinking Revenue Alarms Charities," in the "Washington Post," April 23, 2003, page A1.
  7. See Grantmakers in Health, May 2003.
  8. "Report on Charitable Fundraising Campaigns in New Hampshire," New Hampshire Bar Journal, December 1996 (Vol. 37, No.4), pp. 18-22.
  9. NASCO, an affiliate of the National Association of Attorneys General, addressed in some detail the issue of charitable solicitation over the Internet, rather than by direct mail or by telephone solicitation, and issued the "Charleston Principles" as guidelines in this rapidly-changing environment.
  10. See, Michael DeLucia, "Protecting the Public Interest: The Sale of Nonprofit Health Care Organizations," New Hampshire Bar Journal, December 1996 (Vol. 37, No. 4), pp. 36-39.
  11. The entire December 1996 issue of the New Hampshire Bar Journal was devoted to nonprofit entities, including articles on conflicts of interest, tax law regulating the nonprofit sector, and commentary on the Probate Courts.
  12. See, RSA 7:19-a for the complete statute.

The Author

Michael S. DeLuciaMichael S. DeLucia is the Director of Charitable Trusts and Senior Attorney General at the Department of Justice, Concord, New Hampshire.



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