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Nonprofit Law/Return of Donation?

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QUESTION: If a donor get donors remorse, can he change his mind and demand the donation to be returned?

We own and operate an equine rescue where every year farmers donate large amounts of hay to the rescue. This year a farmer donated 31 ton of hay. He received his donation receipt. 24 hours later, we received a call from the farmer indicating that he needs the cash and he can sell the hay down in Calif. for 3x the amount of the donation monetary value of the donation receipt and we either give him cash in that amount or he comes to get his hay back. He said that if we do not give the hay back, he will call the Sheriff's Office and tell them that we stole the hay...that way he gets the hay back anyway. Is there a law indicating that he cannot take his donation back or renege on the donation?

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

A case that discusses the issues is at:
http://goo.gl/YQB5s
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.

By the way.  Your organization does not estimate the value of the donation. Details of the acknowledgement are found on pdf page 11 at:
http://www.irs.gov/pub/irs-pdf/p1771.pdf

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

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.    



---------- FOLLOW-UP ----------

QUESTION: The estimated value of the hay donation is $8300. The farmer demanded $24,000 cash, then he changed it down to the amount of the donation receipt.

Answer
See the IRS Publication "Charitable Donations --- Substantiation
and Disclosure Requirements"
http://www.irs.gov/pub/irs-pdf/p1771.pdf
on pdf page 5
---Start of Excerpt--
... an organization can assist
a donor by providing a timely, written statement containing
the following information:
1.  name of organization
...
3. description (but not the value) of non-cash contribution
4.  statement that no goods or services were provided by the
organization in return for the contribution, if that was the
case
---End of Excerpt--
Notice "but not the value", above.

It is up to the donor to deal with the valuation of the property. That donor can see the IRS Publication 561, "Determining the Value of Donated Property", which is available at
www.irs.gov/pub/irs-pdf/p561.pdf and specifically on page 5, right column:
--- Start of Excerpt ---
If you donate any inventory item to a charitable
organization, the amount of your deductible con-
tribution generally is the FMV of the item, minus
any gain you would have realized if you had sold
the item at its FMV on the date of the gift. For
more information, see Publication 526.
--- End of Excerpt ---

That publication 526 is available at http://www.irs.gov/pub/irs-pdf/p526.pdf and specifically in the middle column of page 10 under "Inventory".

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

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

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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 Harvey108@hotmail.com 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 "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

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.

Education/Credentials

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

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


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