Senate panel advances bill to speed legacy gifts to nonprofits, limit custodial paperwork

Senate President Coleman and Minority Leader Simpson persuaded the Senate Finance Committee on Thursday to advance SB118, a bill that would standardize how financial institutions transfer legacy gifts to nonprofit beneficiaries and limit practices that require charities to open new accounts or submit excessive personal data for staff.

The bill’s sponsors said the measure requires nonprofits to present a standard affidavit and supporting documents and then obliges the holding institution to transfer the funds within 60 days of receiving that information, unless federal law requires a longer period. “Nonprofits follow strict financial reporting guidelines and often face capacity limitations,” President Coleman told the committee, urging the measure as a way to reduce burden and speed donor intent.

Why it matters: Witnesses from small and large charities, universities and the banking industry described repeated examples in which beneficiary-designated accounts took months — sometimes a year — to be delivered because custodians required charities to open accounts, provide executives’ Social Security numbers, dates of birth and home addresses, or otherwise treat the nonprofit as a new customer. Jack Murphy, government affairs director at the Colorado Nonprofit Association, said those practices can be “time consuming, excessively burdensome, and in some cases, compromising to staff sensitive personal information.”

Evidence and debate: University of Denver gift-planning director John Krause told the committee a donor’s IRA required months of legal and administrative follow-up, which delayed an endowed scholarship that otherwise would have supported additional students. Teresa Garcia, planned giving officer at Colorado Public Radio, described two custodians handling one donor’s accounts very differently — one paid within weeks after an acceptance form; the other required account-opening and took months. Allison Morgan of the Colorado Bankers Association said banks participated in stakeholder discussions and supported a workable bill that leaves room for federal-law exceptions.

Amendments and procedural outcome: The committee adopted a department-requested technical amendment (L001) to align enforcement language with DORA’s technical citation. Minority Leader Simpson moved the amended bill to the Committee of the Whole with a favorable recommendation; the committee also placed SB118 on the consent calendar.

What remains: The enacted text clarifies the 60-day clock starts when a financial institution has received the affidavit and all required documentation from the nonprofit; witnesses said beneficiary-designated accounts generally bypass probate, so distributions should be faster than assets subject to estates. The bill contains no fiscal note and supporters said they engaged banks, credit unions, estate attorneys and planned-giving professionals in drafting the language. The Committee of the Whole will consider the bill next.