SB 3123: Educational Gifts; Donor-Conditioned Educational Awards; Conditional Gifts; School-Conditioned Enrollment; Contractual Relationships

A BILL FOR AN ACT

RELATING TO PRIVATE SUPPORT OF EDUCATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that conditional gifts made for purposes to support private educational efforts, including both schooling and scholarships, promotes learning, access, and academic advancement, and are not intended to create contractual obligations.  Treating these awards as contractual obligations may undermine donor intent, discourage charitable giving, and create uncertainty and inconsistent legal treatment of these awards.

     The legislature further finds that these gifts customarily include specified eligibility criteria, including academic performance minimums, standards of conduct, and enrollment status, and require compliance with the donor's stated requirements for the continuation of the award.

     The legislature further finds that recognizing and providing guidance about the nature and benefits of these conditional educational gifts is a public purpose, and will preserve and promote donors' intentions, will encourage flexibility, innovation, and additional philanthropic educational support across the State for students, and will promote uniform statewide treatment.

     The legislature finds that private pre-schools and private K‑12 schools in the State have long played an important role in the community and that confirming that treating free education and scholarships as gifts will encourage private support for education.

     The legislature further finds that establishing statewide uniformity in the treatment of private conditional gifts will be beneficial and avoid potentially conflicting treatment for private sponsors of educational programs.

     The legislature also finds that through this approach, students in private pre-K and K-12 education institutions and students receiving scholarships for this schooling will enjoy stronger support and be able to benefit from these educational resources, opportunities, and activities without the fear of legal penalties for any perceived contractual obligations to the student or the institution.

     The purpose of the Act is to:

     (1)  Clarify and establish uniformity regarding the relationship between private schools where no tuition is required, students, and donors concerning educational awards conditioned on donor-specified requirements; and

     (2)  To provide that the schooling and awards are considered conditional gifts rather than contractual obligations unless the parties agree otherwise in writing.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

EDUCATIONAL GIFTS

     §   -1  Conditional gift.  (a)  Unless the parties agree otherwise in writing, any donor-conditioned educational award for attendance at a private pre-school, elementary, middle, or high school or any school-conditioned enrollment at any private school where no tuition or other monetary consideration is required or paid by the recipient shall be considered to be a conditional gift and not a contract, notwithstanding that the donor or school operator may require the student or the student's parents or guardians to:

     (1)  Pay for any optional extracurricular benefits, goods, or services;

     (2)  Allow the use of the student's name, image, likeness, or work product for non-commercial purposes; or

     (3)  Sign waivers, consents, or similar agreements as a condition of participation in any school-related activity.

     (b)  A conditional gift under this section may be subject to reasonable conditions, including eligibility criteria, academic performance minimums, standards of conduct, enrollment status, or other donor‑imposed or educational institution requirements, and the continuation of the award shall be contingent upon the satisfaction of those conditions.

     (c)  The modification or termination of any donor‑conditioned educational award or any school-conditioned enrollment for failure to satisfy the applicable conditions shall not give rise to a contractual claim; provided that the conditions are applied in a manner consistent with the terms of the award and applicable law.

     (d)  For the purposes of this section, "donor-conditioned educational award" means a scholarship, grant, tuition waiver, or similar educational benefit funded in whole or in part by a private donation, endowment, or charitable contribution and subject to donor-imposed conditions."

     SECTION 3.  This Act shall apply only to donor-conditioned educational awards and school-conditioned enrollments made on or after its effective date.

     SECTION 4.  If any provision of this Act or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 5.  This Act shall take effect upon its approval.

Report Title:

Educational Gifts; Donor-Conditioned Educational Awards; Conditional Gifts; School-Conditioned Enrollment; Contractual Relationships

Description:

Clarifies that free tuition at private educational institutions or school-conditioned enrollment at private educational institutions where no tuition or other monetary consideration is required or paid by the recipient are to be considered conditional gifts that support educational advancements rather than contractual obligations unless the parties agree otherwise in writing.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO PRIVATE SUPPORT OF EDUCATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that conditional gifts made for purposes to support private educational efforts, including both schooling and scholarships, promotes learning, access, and academic advancement, and are not intended to create contractual obligations.  Treating such awards as contractual obligations may undermine donor intent, discourage charitable giving, and create uncertainty and inconsistent legal treatment of these awards.

     The legislature further finds that donor-conditioned awards customarily include specified eligibility criteria, such as academic performance minimums, standards of conduct, and enrollment status, and require compliance with the donor's stated requirements for the continuation of the award.

     The legislature further finds that recognizing and providing guidance about the nature and benefits of these conditional educational gifts is a public purpose, and will preserve and promote donors' intentions, will encourage flexibility, innovation, and additional philanthropic educational support across the State for students, and will promote uniform statewide treatment.

     The legislature finds that private pre-schools and private K-12 schools in Hawaii have long played an important role in the community and that confirming that treating free education and scholarships as gifts will encourage private support for education.

     The legislature further finds that establishing statewide uniformity in the treatment of private conditional gifts will be beneficial and avoid potentially conflicting treatment for private sponsors of educational programs.

     The legislature also finds that through this approach, students in private pre-K and K-12 education institutions and students receiving scholarships for such schooling will enjoy stronger support and be able to benefit from these educational resources, opportunities, and activities without the fear of legal penalties for any perceived contractual obligations to the student or the institution.

     The purpose of the Act is to clarify and establish uniformity regarding the relationship between private schools where no tuition is required, students, and donors concerning educational awards conditioned on donor-specified requirements, and to provide that such awards are considered conditional gifts rather than contractual obligations.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

EDUCATIONAL GIFTS

          §    -1  Donor-conditioned educational awards; conditional gift.  (a)  A donor-conditioned educational award for attendance at a private pre-school, elementary, middle, or high school for which no tuition or other monetary consideration is required or paid by the recipient shall be considered to be a conditional gift and not a contract, notwithstanding that the school operator may require the student or the student's parents or guardians to:

     (1)  Pay for any optional extra-curricular benefits, goods, or services;

     (2)  Permit use of the student's name, image, likeness, or work product for non-commercial purposes; or

     (3)  Sign waivers, consents, or similar agreements as a condition of participation in any school-related activity.

     (b)  A conditional gift under this section may be subject to reasonable conditions, including eligibility criteria, academic performance minimums, standards of conduct, enrollment status, or other donor-imposed or educational institution requirements, and the continuation of the award shall be contingent upon the satisfaction of those conditions.

     (c)  The modification or termination of a donor-conditioned educational award for failure to satisfy the applicable conditions shall not give rise to a contractual claim; provided that the conditions are applied in a manner consistent with the terms of the award and applicable law.

     (d)  As used in this section, "donor-conditioned educational award" means a scholarship, grant, tuition waiver, or similar educational benefit funded in whole or in part by a private donation, endowment, or charitable contribution and subject to donor-imposed conditions.

     SECTION 3.  This Act shall apply only to donor-conditioned educational awards made on or after its effective date.

     SECTION 4.  If any provision of this Act or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 5.  This Act shall take effect upon its approval.

Report Title:

Educational Gifts; Donor-Conditioned Educational Awards; Conditional Gifts; Contractual Relationships

Description:

Clarifies that free tuition at private educational institutions are to be considered conditional gifts that support educational advancements rather than contractual obligations.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 2718

Honolulu, Hawaii

RE:     S.B. No. 3123

        S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

     Your Committees on Judiciary and Education, to which was referred S.B. No. 3123 entitled:

"A BILL FOR AN ACT RELATING TO PRIVATE SUPPORT OF EDUCATION,"

beg leave to report as follows:

     The purpose and intent of this measure is to clarify that free tuition at private educational institutions are to be considered conditional gifts that support educational advancements rather than contractual obligations.

     Your Committees received testimony in support of this measure from the Office of the Governor, Office of Hawaiian Affairs, Hawaiʻi Association of Independent Schools, Hawaiian Council, Kamehameha Schools, Hawaiʻi Community Foundation, Hawaiʻi School for Girls at La Pietra, St. Andrew's Schools, Association of Hawaiian Civic Clubs, Hawaiʻi Children's Action Network Speaks!, Ke One O Kākuhihewa, Mid-Pacific Institute, Saint Louis School, Sacred Hearts Academy, CARES, and fourteen individuals.

     Your Committees find that donor-conditioned educational awards that support private educational efforts are conditional gifts and are not intended to create contractual obligations.  Treating these educational awards as contractual obligations may undermine donor intent and discourage charitable giving, creating uncertainty and inconsistent legal treatment of these awards.  This measure will clarify and promote uniformity regarding the treatment of donor-conditioned awards to preserve donative intent and encourage the continued availability of privately funded educational assistance.

     Your Committees note the concern raised by Kamehameha Schools that further clarification of the distinction between a charitable gift, including school-conditioned enrollment, and contractual relationship is necessary to provide certainty that donors and schools who support educational programs in the State may do so without fear that their generosity will later be recharacterized in ways that impose obligations or restrictions to which schools and donors did not agree.  Therefore, amendments to this measure are necessary to address this concern.

     Your Committees have amended this measure by:

     (1)  Specifying that unless the parties agree otherwise in writing, any donor-conditioned educational award for attendance at a private educational institution or any school-conditioned enrollment at a private educational institution where no tuition or other monetary consideration is required or paid by the recipient shall be considered a conditional gift and not a contract;

     (2)  Clarifying that a donor or school operator may require the student or the student's parents or guardians to pay for optional extracurricular benefits, goods, or services or enter into certain agreements;

     (3)  Specifying that the modification or termination of any donor‑conditioned educational award or any school‑conditioned enrollment for failure to satisfy the applicable conditions shall not give rise to a contractual claim;

     (4)  Specifying that this measure shall apply only to donor‑conditioned educational awards and school‑conditioned enrollments made on or after its effective date;

     (5)  Amending section 1 to reflect its amended purpose; and

     (6)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Judiciary and Education that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 3123, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 3123, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committees on Judiciary and Education,