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COVINGTON & BURLING

Smithsonian Institution
April 18, 1972
Page Eleven

charitable institutions, do not look only to corporate principles or trust principles or contract principles in any consistent manner. Rather, the courts look to one or the other set of principles of law, depending on the issue presented and the result which is considered equitable.25/

In determining the principles of law governing the definition of income for a charitable corporation such as the Smithsonian, there being no case which has been found directly on point, those decisions involving the administration of endowment funds seem particularly germane. As stated in The Law and the Lore of Endowment Funds, supra, at 27, "where the issue involves the investment of funds, accounting for their use or other aspects of administration or housekeeping, the courts show a marked tendency to apply corporate principles rather than trust principles, in order to accord charitable corporations a maximum degree of flexibility in their operations." For example: (1) Charitable institutions generally will not be limited to a legal list of investments applicable to trustees;26/ (2) charitable institutions generally commingle their endowment funds, whereas trustees are forbidden to commingle separate trust funds;27/ (3) charitable institutions generally find no prohibition in retaining part of income, whereas trustees