- The Board of Trustees (“Board”) of the Flag Heritage Foundation (“Foundation”) takes notice that a number of collections of flag books and flag- and symbol-related documentation of significant scholarly value are dispersed when their owners die or are incapacitated without having made adequate provision for their collections to be preserved in permanent institutions.
- The heirs to these collections sometimes do not fully appreciate their scholarly value, or the benefit to the world of preserving their integrity and availability to scholars. They may therefore take the short-term profit gained by selling off the most valuable books, and discard the rest, whose value they do not understand. Even if they wish to preserve the collection for scholarly use, often they do not have the expertise or resources to do so.
- To help correct this problem, and in accord with the mandate of the Foundation, found in Article Third of its Trust Declaration, to “preserve … flags and artifacts related to them,” to “support the conducting … of research in … private libraries,” to “make grants for any of the foregoing purposes,” and to “take any other action designed to further the purposes of the Trust,” the Board hereby creates the FLAG HERITAGE FOUNDATION COLLECTION PRESERVATION PROGRAM (“Program”).
- The Program will offer qualifying collections two paths to preservation, which will be called the ESCROW PATH and the LEGAL ASSISTANCE PATH.
- To qualify for Program assistance, a collection (or its proprietor) must apply to the Foundation, but the Foundation may invite a collection to apply. The Board or its designee(s) will inspect the collection and determine (in the unreviewable discretion of the Board) whether it is of sufficient scholarly value to justify Program assistance.
- Preservation Program assistance may, but need not, include cataloguing assistance from the Foundation’s Cataloguing Support Program.
The Escrow Path
- In the Escrow Path, the Foundation will offer to receive by deed, or for a nominal price, the REMAINDER of the collection after the owner’s death. Remainder is defined here as that property interest which survives after the extinction of the owner’s life estate. By deeding the remainder during his lifetime, the owner removes the remainder from his estate, so it does not pass to his heirs either by operation of law or by a previously executed will.
- Once the Foundation receives a remainder, it will transfer it (or the collection itself, once it receives title to it) to a permanent receiving institution, such as (but not limited to) a museum or university library, where its professional preservation and permanent access to scholars can be assured to a reasonable degree of certainty. The Foundation may not transfer a collection or a remainder to a private individual, or to a for-profit institution.
- The Foundation will give rather than sell the remainder or the collection to the receiving institution. Incidental expenses will either be absorbed by the Foundation or recovered from the receiving institution. The Foundation will make no profit from an Escrow Path transaction. Its sole purpose will be to receive and hold title to the remainder and/or the collection, explore the suitability of prospective recipients, and negotiate and execute a transfer to a suitable recipient institution.
- In some cases the owner of a collection may wish to create an Escrow Path transaction by transferring title to a collection before death, perhaps (but not necessarily) reserving to himself the possession and use of the collection for his lifetime. In such a case the Foundation will receive complete title and not just a remainder, but will otherwise treat its interest in the collection in the same way and will respect any reservations agreed to. The Foundation is authorized to adapt its procedures to circumstances so as to effect its purpose of transferring the collection intact to an institution offering preservation and ongoing scholarly access.
- Although this is called an “Escrow Path,” it does not create a legally defined escrow relationship. The Foundation will, however, have a fiduciary duty to the donor of the remainder to execute faithfully the terms of the offer under which it received the remainder or the collection, and to transfer the collection to a suitable receiving institution.
The Legal Assistance Path
- The owner of a qualifying collection may prefer to transfer the collection, or the remainder, to a trust of his own devising rather than to the Foundation. The Board recognizes that collectors often have this intention, but for various reasons defer action until through death or incapacity it becomes too late for them to give effect to their intentions.
- The Board considers that the charitable purposes the Foundation seeks to advance will benefit equally whether the collection (or remainder) passes to the Foundation to transmit to a receiving institution, or passes to a trust specially created for the same purpose. The important thing is that the collection passes outside the owner’s estate, and beyond the power of his heirs to disperse it or to benefit from its dispersal. If, therefore, the owner of a qualifying collection prefers to establish his own trust for this purpose, the Foundation may facilitate this by paying the legal costs of establishing this trust.
- The amount of any grant or subsidy will be determined by the Board after the Board’s designee consults with counsel. The purpose of the grant would be to pay for counsel to draft the trust instrument, for associated consultation and professional costs, and for incidental expenses such as notarization and registration. Additional grants or subsidies will require supplemental approval by the Board. The Board or its designee will have authority to vary the terms of the grant as needed to give effect to the purposes of the Program. It is not intended that Legal Assistance Grants be used to finance litigation.
- A Legal Assistance Grant under this part of the program would be available only to establish a trust to receive the collection or the remainder for the purpose of placement in a permanent institution. While the owner’s heirs may have input into the selection of the institution, and may in some circumstances share in any settlement made by that institution, they would not be the beneficiaries of the trust and would not have ultimate control of the selection, the settlement if any, or any other aspect of the transaction. Any trust established through a Legal Assistance Grant must vest such ultimate control in independent trustees whose responsibility would be to the collection rather than to the heirs. It is hoped, although not required, that one of the trustees of a trust established with the aid of a Legal Assistance Grant would be nominated by the Board. No trustee of a trust established with a Legal Assistance Grant may benefit personally from any disposition of the trust.
- Grants in aid of Program objectives will be administered by the Board or its designees, and will ordinarily take the form of underwriting of services, payment of counsel and other contractors, and the like. Cash grants directly to collections or their proprietors are disfavored as methods of achieving Program objectives, and any such grant must be specifically authorized by the Board.
- No grant by the Board creates any entitlement on the part of a qualifying collection or its proprietor, and grants may be withdrawn or rescinded by the Board in its unreviewable discretion, provided that undertakings made by the Board or its agents to third parties will be honored.