(2) All gifts or scholarship grant funds received by the commission that are not transferred to community foundations pursuant to subsection (1) of this section shall be placed in the hands of the State Treasurer, who is designated as the custodian thereof and who may hold, in the manner provided by law, the principal and interest on the gifts and grants. Funds may be withdrawn periodically by the commission to provide for administrative expenditures and make payments upon scholarships awarded by the commission.
(3) As used in this section, "community foundation" means an organization that is:
(a) A community trust or foundation within the meaning of section 170 of the Internal Revenue Code of 1986 and section 1.170A-9(e)(10) of the Treasury Regulations thereunder;
(b) Exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code of 1986; and
(c) Not a private foundation within the meaning of section 509 of the Internal Revenue Code of 1986. [Formerly 351.670; 1967 c.335 §42; 1987 c.394 §6; 1993 c.258 §1; 1995 c.12 §5; 1997 c.524 §1; 2011 c.637 §175; 2013 c.747 §119]