When unhappy donors want their money back

Scales of Justice (2)

A donor was approached by the Executive Director of the local Humane Society with a $25,000 proposal to fund the development of an onsite low-cost spay and neuter clinic.  The donor was told that bringing those services in-house would save $60,000 in annual operating costs at the Humane Society and that the clinic would be operational within 12 months.

The Executive Director left the organization, the clinic never opened, and the donor wants his money back.  Is he right?

That decision is now up to the Courts.  U.S. law once stood firmly on the premise that once a gift was given it could not be taken back, yet that is changing in many states.

There are ways to address issues like these before they prompt a lawsuit—

From the non-profit side: put in place a policy which makes it clear that the Board Chair or Development Committee Chair must sign-off on funding proposals before they are submitted to a donor and make certain your Gift Acceptance Policies are up-to-date.

From the donor side: always have a written agreement and include a reversionary clause, something like “If due to changed circumstances it is impracticable to carry out the above purpose, the gift will be used for XYZ or given to another named charity of the donor’s choosing”.