Nonprofit Law/Designated Funds


Hello, I am a bookkeeper for a 501(c)3 that raises money for several different projects, child sponsorship, well drilling and mission trips in Africa.  We have several donors who donate for a specific cause. We have restricted designations and non restricted designation. When they raise money for something specific (a restricted designation) can they come back and ask for that money to be used for a different designation? We have donors who donate regularly on behalf of an individual so they may go on a mission trip with us to Africa.  This money builds up in what we call a Future Trip Fund until they decide what mission trip they are going on.  Some of this money is donated by the individual and some of it is donated by many others. What is the legal standing for this money if too much is raised or the individual decides not to participate in the mission trip?

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 issue called "enforceability of a restricted gift to a
nonprofit organization"

A case that discusses the issues is at:
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

I have in my profile that this free forum is only for general
questions relating to IRS federal exemption issues of 501(c)(3)
organizations. I do not know of any state's case law that addresses
this issue differently than Connecticut other than, New York, or

You may want to inform the donors of your issues and your desire to
use the funds in another way and request their permission. See
"The Importance of Respecting Donor Wishes" from Guidestar
which is not in reference to the law but is in reference to
maintaining good relationships with existing donors.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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