In this country (and therefore the State of Texas), property is owned by the people – even if some of it is managed, administered, etc. by national, state, and/or local governments.
However, when the rightful owner can’t be found, the property is supposed to be escheated to the government to hold in trust until the rightful owner is located. If this owner is found, the government gives the property to them. If they aren’t found, then the government (as trustee) sells the asset to another private owner.
In Texas, when an asset that belongs to someone else has been in the hands of a 3rd party for three years and the true owner doesn’t know about it, then the 3rd party holder is supposed to send the asset to the State. The State, in turn, advertises/lists the asset/property in various publications (typically local newspapers) with the name of the rightful owner so that this owner can claim their rightful asset(s).
The annual “measurement date” is June 1st of each year with remission/payment of the property due by the following November 1st. (No extensions are allowed.) The State gives you an “incentive” to escheat the property to them; specifically, they can charge a penalty equal to the value of the asset plus an additional 10% for failure to remit.
This is one of the areas of interest to state auditors. They will inquire and want to see files and documents on property that you’ve had for more than three years. They will also want to see documentation on your attempt to pay/refund the rightful owner of the property (so keep it in a file that you can access and provide to them). (Typical evidence is the returned or outstanding check that was sent by registered or certified mail.) For property you’ve been holding and on which no communications have occurred for more than three years, they will likely challenge why you’ve kept the property instead of turning it over to them. Further, with the State (and most/all governmental entities for that matter) looking at significant budget deficits, there exists an even greater emphasis on generating additional revenues from nonconventional sources.
Now for the practical application to nonprofit organizations: the most common asset that needs to be considered and remembered is outstanding checks. As a NPO, if you have outstanding checks for which you’ve not been in contact or attempted contact with the payee for three years, then you probably need to consider this escheating requirement.