Can A Donor Demand That She Get Her Donation Back?

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    A reader wrote: “I know of an organization where the donor gave restricted funds, i.e., funds specified for a certain program, that the nonprofit agreed to.

    “The nonprofit has been giving regular reports to the donor, along with achieved outcomes, but the donor suddenly insists that she wants all of her money back.

    “I’ve never encountered this before. Have you? Might you venture a suggestion?”
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    The first question I’d ask would be about why … why she wants her money back, what happened … what provoked her demand.

    Not knowing the answer to those questions, I’d have to respond generically:

    A restricted gift must be used (only) for the purpose(s) stated-and-agreed to by the donor and the NPO prior to the gift being made; and, if the money was used for the agreed upon purposes, and the NPO provided regular reports to the donor confirming that the money was so used, I can’t imagine a “legitimate” basis for the donor demanding to have her money back.

    It may not sit right for the NPO to be in this position, but my experience working with nonprofits makes me sensitive to the negative publicity an NPO could engender … that could hurt their future fundraising efforts. So, in response to your request for a suggestion, I offer the following thoughts:

      •  If the donor is a major donor, it raises the question of the potential for future donations –
         but if she’s demanding her money back now, future potential seems unlikely.
      •  If the donor has major influence in the community, it might be best (good will-wise) for the
         NPO to return the donation, if they can !!

    Of course, if the above considerations don’t apply, then there’d be little motivation for the nonprofit to even consider returning the contribution.

      •  Giving in to someone who is generally perceived as an “eccentric” might set a bad
         precedent and create the image that the NPO is poorly managed.
      •  If the NPO doesn’t feel that a court case will engender the kind of negative publicity
         that will hurt them, then they should fight the case if the donor takes it to court.

    If the question becomes about legal issues — i.e., if the donor wants to sue to get her money back, the court will decide if she has a case … or not.

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    Have a comment or a question about starting, evaluating or expanding your fundraising program? Contact me at Hank@Major-Capital-Giving.com With over 30 years of counseling in major gifts, capital campaigns, bequest programs and the planning studies to precede these three, I’ll be pleased to answer your questions.