Battered Nonprofits Seek to Tap Nest Eggs

Andrew Grumet, a New York attorney who specializes in nonprofit law, says many donors and institutions see merit to the old law because philanthropists want to endow operations "in perpetuity" and "there is a real danger that once you dip into principal you aren't going to get it back."

Adam Weinberg, director of the Whitney Museum of American Art in New York, says some of the institution's $120 million endowment is currently below original value and subject to the state's spending restrictions. But Mr. Weinberg says he and his board would resist dipping into principal even though the Whitney recently cut its budget by 15%. "I want to prepare for the future, too," he says.