Expert: Harvey Mechanic - 11/8/2009

Question
I hope I can give some background.  Donations were made to a public/government entity.  Public entity faced being disbanded by the governing body.  Before that could happen land purchased and remaining donations were transferred to a 501(c)(3).  Some donors to the original public entity are seriously considering asking for their money back.  What is the obligation of the 501(c)(3) entity regarding return of those donations?  Most of the donations were used to purchase the land, so there is not nearly enough funds to return?  

Answer
Generally, donors give up any authority over donated items and
funds, unless they had a specific signed agreement with the
nonprofit with a reverter clause or at least a letter indicating
the conditional nature of the gift.

This an issued called "enforceability of a restricted gift to a
nonprofit organization"

A case that discusses the issues is at:
http://viewer.zoho.com/docs/tlcaMj
starting in the middle of the first column.

although that was a Connecticut case, most states would have
similar treatment.  In other words, a donor who has made a
completed charitable gift to a nonprofit organization does not
even have standing in a court to bring an action to enforce the
terms of that gift unless the gift instrument contained an
express reservation of control over the disposition of the gift,
such as a right of reverter or a right to redirect. A right of
reverter means that the donation would be refunded if the charity
breached the agreement.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com