US President Donald Trump's charitable foundation has reached a deal to go out of business, even as Trump continues to fight allegations he misused its assets to resolve business disputes and boost his run for the White House.
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New York's attorney-general and lawyers for the Trump Foundation agreed on a court-supervised process for shutting down the charity and distributing about $US1.7 million ($A2.4 million) in remaining funds to other nonprofit groups.
The agreement resolved one part of the legal drama surrounding Trump, whose campaign, transition, inauguration and real estate empire are all under investigation.
Attorney-General Barbara Underwood's lawsuit alleging Trump and his family illegally operated the foundation as an extension of his businesses and his presidential campaign will continue.
The lawsuit seeks $US2.8 million ($A3.9 million) in restitution and a 10-year ban on Trump and his three eldest children - Donald Jr., Eric and Ivanka - from running any charities in New York.
In a statement on Tuesday, Underwood cited "a shocking pattern of illegality involving the Trump Foundation - including unlawful coordination with the Trump presidential campaign, repeated and wilful self-dealing, and much more."
The foundation operated as "little more than a chequebook to serve Mr. Trump's business and political interests," she said.
Lawyers for the foundation have said any infractions were minor.
Trump pledged to dissolve the three-decade-old foundation and donate its funds to charity after his 2016 election, but his lawyers said they were thwarted by the attorney-general's office, which wanted oversight over its closure. The attorney-general's office said it would have been "unacceptable" to let the foundation fold without close supervision.
Once the judge approves the deal to dissolve the charity, the two sides will have 30 days to provide her with a list of nonprofit organisations that should get the remaining funds. Each charity will get the same amount, and the attorney-general's office will have the right to reject ones it deems unfit to receive funds.
In her lawsuit, Underwood alleged that Trump used the foundation to help bolster his campaign by giving out big grants of other's people money to veterans organisations during the run-up to the Iowa caucuses, the first presidential nominating contest of 2016.
Underwood has referred her office's findings to the IRS and the Federal Election Commission. Those agencies have not commented on the matter.
Australian Associated Press