Aligned Intentions
(Added 2/6/2012)
We, along with four other charities, just received the proceeds of a charitable remainder unitrust. Interestingly, the amount we received was just about the same as the amount put into the trust. While the value didn't increase (as was projected on the graph in the original proposal), it didn't decrease very much either. All told, after almost 20 years, we received about 95 percent of our portion of the original gift amount. The problem is determining what my organization is now going to do with the money. The notes from conversations my predecessor (three predecessors ago, actually) had with the donors clearly indicate that they wanted the money to be used to fund extra supplies for our clients (we are a community health provider), but my executive director, who, like me, wasn't here when the gift was made, says she needs the money for other purposes - which I think basically means she needs it to balance the annual budget. Should we use the money as she thinks is best - and, truth be told, probably is or should we follow the donors' wishes?
An executive director once told me that no donor will ever dictate his budget. Fair enough, but what does a charity do with gifts that were acquired because it agreed to do something specific with the money? This is a growing issue in American philanthropy, and may be one reason (among many others) that philanthropists are establishing family foundations more rapidly than ever before. More and more, charities are being flooded with requests from donors, as a condition of their support, to do something specific with the money.
I take it that the donors are dead, and so it may seem easy to ignore those notes. And of course it is. But it isn't right. If a charity accepts a gift on the condition that the money is to be used in a specific way, the charity needs to use the money in that way. The charity should always honor a donor's intent.
The problem with many deferred commitments in this regard is that most development professionals think of the trust document itself as the most important part of completing the process. And, from the perspective of the IRS, it is. But the trust document rarely outlines the use to which the money will be put when it becomes available. Direction on that issue should be provided by a gift agreement, which is a separate document from the trust agreement. In this case, the notes of two decades ago, clearly written, as you say they were, should provide sufficient guidance. An attorney I consulted advises that the notes by themselves don't constitute a legal obligation for the charity - a signed agreement would have far more weight but that does not give a green light to use the money any way the head of an organization wants.
Donor rights and intentions command a lot of written attention in the nonprofit pantheon, mostly through the prism of legal opinion. But the basic idea, as I see it anyway, is less legal than ethical. The stinging question is, if we are to ask donors for their support on the basis that we will do what they ask of us because everyone agrees that what is asked is what is (or will be) needed - then what purpose is served by reneging on the agreement - no matter how absent of legal authority? I can tell you this: If I knew a charity had intentionally and unambiguously defied a donor's wishes, I would never support that organization again. And I imagine many of your donors would feel the same way. Your executive director may not want to be bound by a dead hand, but that's the deal her predecessor made, in the name of the organization, and it should be honored.
Truth be told, if you're not absolutely certain that you can and will use the money as a donor directs, now or in the future, you always have the option of not accepting the gift.