A pledged contribution may encourage an organization to take action or adopt an action plan desired by the donor. Motivated by the amount of the expected contribution, the organization may move forward with an otherwise unfeasible program or project. It can make public announcements, ask other donors to contribute to the effort and, if not, put its reputation on the expectation that the necessary funds will be available. An organization may want a donation agreement to protect it from these vulnerabilities. If a donation is made for a specific purpose, nothing is said about whether it can be used for other purposes, and the stated purpose does not materialize, disgruntled donors can claim that they have been misled by the organization`s representations to their detriment. Or they can claim that the gift was conditional on the occurrence of an event that did not occur, and due to the absence of this condition, they are entitled to a refund. A provision that gives the recipient the right to use the donation elsewhere avoids these claims. It is also useful in happy circumstances that more money is collected than necessary. For example: What are the consequences if a donor does not keep a promise? If the likely outcome is little or no financial hardship or other significant damage to the organization and its work, there is no need to insist on a donation agreement. If a contribution is not voluntary, it is not a donation deduction for federal income tax purposes. This begs the question: if someone enters into a legally binding agreement to donate goods or money to an organization, is the contribution still considered voluntary? Fortunately, the courts have confirmed that a donation can be voluntary, although its terms of payment are governed by a legally enforceable donation agreement. A simple pledge can be all an organization needs from a donor. However, before an organization invests a lot of time, money, and credibility in a larger project, it may want to minimize the risk of misunderstandings and make a donor`s promise to support the project a legally binding commitment.
A carefully drafted donation agreement can achieve this; it can ensure that there is an opinion vote between a donor and a recipient on the amount and timing of the donation and other important issues that may need to be addressed to ensure a mutually satisfying experience. A donation agreement is required whenever the donor imposes and accepts certain ongoing conditions or obligations in relation to the donation. For example, formal written agreements are required for: Donations to save the park must be used for the purposes described in this agreement and for other purposes identified by the organization to preserve open spaces and create outdoor recreation opportunities in the Township of Greene. A donation or donation agreement, not to be confused with a donation acceptance policy, is specifically designed to explain and document what the donor expects and what the nonprofit is committed to. Any gift that reaches the primary gift status defined by your organization should require a donation agreement, even at the monthly donation level. A deep donation agreement can ensure that your nonprofit and donor are on the same page and consistent with different aspects of the primary gift. Donation agreements are filled out and signed to avoid misunderstandings and show your donor that you care about yourself and that they are valuable and important. Unless otherwise agreed, a donation will generally not be refunded once it has been received by the organization. A provision of the donation contract may make this clear. For example: A provision may be included in the donation agreement to specify that the donation will be returned to the donor if the cash or other items delivered never became the property of the recipient. For example: The Limited Donation Guide provides an overview of topics related to restricted donations and the creation of a donation contract. The “Donation agreement required to prove restrictions” section provides examples of cases that require clear documentation of the rights and obligations of the donor and the organization with respect to the use and management of the donation.
Each situation is different and a legal advisor is needed not only to ensure the accuracy of the gift contract in terms of understanding the parties, but also to avoid adverse tax consequences. The landowner may also have tax, estate or land use planning goals. The gift agreement gives both parties an opportunity to discuss these objectives, the extent to which the organization assumes a commitment to promote them, and the circumstances in which the landowner may resign if this is not achieved. Some potential leasers of easements are unwilling or unable to afford to fund the administration of easements or permanently reduce the value of their property without a federal income tax deduction being available. The gift agreement gives them the opportunity to negotiate withdrawal rights if they are not satisfied with the potential tax benefit estimated by their tax advisors and appraisers. The donation agreement provides an opportunity for the conservation organization to make it clear that it has no responsibility for accepting easement provisions that do not promote its objectives or are otherwise inconsistent with its policies and procedures. A well-written donation agreement can provide these assurances. It can also perform other functions: An excellent reason for a gift agreement is that in the event of a donor`s untimely death, the donor`s estate may not be willing or able to keep a promise of a gift that is not properly documented to establish a legally binding contract.
The estate always has the right – and the legal obligation – to perform contracts concluded during the lifetime of the deceased. This justification for requesting a donation contract is very useful because it applies universally and regardless of the reliability or creditworthiness of the donor. A review of court cases shows that prosecutions for not making a promised donation are rare. The reason for this may be that potential donors are not making promises that they will not keep. Another may be that nonprofits don`t consider the cost of law enforcement – not only in litigation, but also in the public and in the relationship with donors – not worth the benefit of collecting the promised gift. However, sometimes a donor who does not fulfill a commitment caused to an organization outweighs the costs and risks of enforcing the law. One of the fundamental purposes of any agreement proving a cash donation is to determine the amount of the donation and the time or deadlines for payment required. As a general rule, the promised amount must be paid in full by a certain date at the latest. Other payment methods may work well in other cases; For example, a donation may be more affordable if it is made according to a payment plan over time or when a future event occurs. An Introduction to Stewardship Funding Arrangements and the Model Stewardship Funding Covenant provide examples of deferred cash donation agreements that can be adapted to cash donations (whether or not the donations are for stewardship purposes that are at the heart of this guide and model). Charities regularly ask for commitments for future contributions to support the organization or specific projects. These commitments are sometimes referred to as commitments.
They can be oral or included in an informal font such as a pawn card or a signed letter. Promises to make a future donation, if properly documented, can be considered a binding contract in Pennsylvania and, if the donor does not fulfill or refuses its obligation, can be enforced through legal action. Here`s an example of Lynne Wester`s language from Donor Relations Guru that you should have reviewed by your general counsel and then included in your donation agreement: If there is an agreement that the donation will be conditionally delivered based on a specific future event, the agreement may include a provision that the donation can be refunded. For example: A donation agreement can provide this documentation. It can also set expectations and understandings to ensure a satisfying experience for both the donor and the recipient. One of the challenges is to distinguish the circumstances that require a gift agreement from the large number of times a simple promise is enough. A donation agreement can be used to ensure that a donor`s promise to set expectations for both the donor and the recipient can be relied upon, and to avoid misunderstandings. Here is an example of a real estate gift contract created by Tulsa County. Examples of donation agreements provided by the Association of Donor Relations Professionals and Tulsa County. ConservationTools.org, which is administered by the Pennsylvania Land Trust Association, has been very careful in creating a useful guide to donation agreements from the perspective of a conservation organization. You can check it here. A well-designed donation agreement includes a description of the investment of time and money or other potential inconvenience that the conservation organization is likely to suffer by relying on the promised donation.
A few other questions and points from Philanthropy Works that you should consider when drafting your formal and written agreement: If both parties make promises in the agreement, a more specific recitation of the counterparty may be included. The following consideration of a stewardship funding agreement is an example: donations must be forwarded to the organization at the address below. All donations become the property of the Organization upon delivery and are non-refundable, except as expressly provided otherwise in this Donation Agreement. This Donation Agreement is the entire agreement of the Donor and the Organization and supersedes in its entirety all prior or contemporaneous written or oral statements made by the parties or the conduct of the parties. .