The Nonprofit FAQ

Can a Donor Retrieve Gifts of Money or Goods?

Someone wrote to the editor of the Internet Nonprofit Center on April 16, 2001, and asked: I had a question regarding the return of a donation made to a non-profit organization. I have made a donation of money and materials to a museum. However, a situation now exists where I no longer support this institution and would like to rescind my previous donations to the museum. Do I have any legal recourse to get my money and materials back from this institution? Putnam Barber answered: The general answer is no. You probably cannot force the institution to return something you gave to them. If the original gift had been conditional in any way, then any tax deduction taken would be invalid. On the other hand, there's nothing wrong with asking them to return it and getting advice from a tax specialist about how to record the receipt to offset the original deduction. I can't give you any advice about how that works. There has been a lot of discussion of this topic over the years. An attorney (which I'm not) would be able to give you citations, etc. On July 7, 2004, David Ross of the Community Foundation of Oak Park provided this exerpt from the foundation's policies in a message to Nonprofit (see http://www.rain.org/mailman/listinfo/nonprofit): We used to support the summer school programs in our local public schools with an annual fund-raising campaign. To ensure that donations to this campaign were indeed deductible contributions, we solicited (and received) contributions from the entire community, not merely from parents sending their children to summer school. Further, to ensure that they were not charging tuition (illegal in California), the schools agreed to admit summer school students regardless whether their parents donated. Once (over 20 years ago), a parent requested a refund of her donation because her child could not to attend summer school because of illness. We refused. To formalize our position, we then adopted the following policy: REFUNDS OF DONATIONS 1. To qualify as a deduction from taxable income, a charitable donation cannot be in payment for goods or services. Therefore, there is generally no basis for a donor to request a refund of a donation. To make an exception for one donor can disqualify the deductability of donations from other donors. The Community Foundation will not make any such refund except as provided in this policy. 2. A donation made in support of a specific project or program should be spent by the Community Foundation only for that support. If the project or program is cancelled, the donation cannot be spent as intended by the donor. In this case, the Treasurer is authorized to make any requested refund of such a donation without seeking action of the Board of Trustees. However, the Treasurer must report any such refund to the next meeting of the Board of Trustees. 3. Except as provided in Section 2, the Board of Trustees must explicitly act on each request for a refund of a donation. When considering such requests, the Trustees shall act to preserve the deductability of non-refunded donations and to protect the Community Foundation's status as a tax-exempt, public-benefit corporation. This means that, in general, the Trustees will not grant a refund that was requested merely because the donor or the donor's family was unable to participate or otherwise directly benefit from the sponsored program or project. Stephen C. Nill commented in CharityLaw (a service of CharityChannel.com): Generally speaking, this response is correct. A charitable gift, by definition, is irrevocable. The questioner has not said when the gift was made (the older the gift, the less likely some sort of rescission might attain), or why it is that he now wishes his charitable contribution returned. If the reason is that the museum is pursing programmatic directions that the donor no longer can support, it would be difficult to imagine a ground for compelling the return of the gift. If, on the other hand, there are other issues that go to the gift itself, there might be grounds. For example, suppose that the gift was made with certain restrictions as to how the donation was to be spent or utilized. Such restrictions are permissible, and enforceable. If the museum did violence to the donor's express restrictions, then the donor might be able to reclaim the donation. For another example, if the museum misrepresented a material fact that induced the donor to make the donation, then the donor might have an action for fraud -- the remedy of which might be the return of the donation (rescission) or at least damages. The donor may be liable for penalties if he has previously claimed the donation as a charitable income tax deduction, and should consult his tax advisor on this point. In short, we are not given sufficient facts on which to base any kind of prediction here. Put's response was appropriate given the paucity of information provided. (I'm not complaining -- it may well be that there are good reasons why the donor has not given more information.) If the donation is a not inconsequential amount to this donor, he should consult with an attorney versed in the law of tax-exempt organizations. Lisa Runquist added: I would just like to mention that there may be a reason for returning the gift in certain situations. For example, a church organization has taken the position that although gifts are generally not returnable, if they determined that the gift was from a widow or orphan or some other similar class, and the person probably did not have sufficient funds to be making the gift in the first place, they would return the money, no questions asked. However, if someone simply left the church and decided they wanted all of their tithes from over the years returned, that was not a good enough reason. Posted 4/17/01; new material added 7/23/04 -- PB