Honoring the Donor's Wishes
(Added 3/10/16)
You have written in the past of how important it is for a charity to honor a donor’s wishes. But you have addressed only the question of whether the purpose of the gift might someday not be in the best interests of the charity, at least from the charity’s perspective, to carry forth. What about when the charity is perfectly able to carry forth the purpose but chooses not to use the donor’s money in that way? We have a donor, still alive, who, with a major outright but planned endowment gift, provided explicit instructions on how she wanted the gift to be used. We stay in touch with the donor and often thank her for her generosity, but she never asks for an accounting of her gift. And no one brings it up with her. My boss says the donor is elderly and, more important, never signed an agreement, so we’re not legally bound, and besides, the donor is perfectly happy, as she trusts the executive director so much. I think we ought to make sure the money is used in the way we all know she wants – or tell her the truth.
I once had a boss, a long time ago now, who said that no donor, even one who made an endowed gift, is going to hold his feet to the fire on the matter of balancing the budget. (I sense budgetary concerns are at the heart of the issue you describe.) While I understood his need for authority in his job, I also sensed that he was dismissing the donor’s importance.
Not every donor goes to court to ensure that his or her intentions are being honored (but more and more, it seems, are). This woman may not be inclined to ever take legal action, and it may be that she is, in the end, uninterested in how the money is used. The problem, however, is that you don’t know that. What you know is what she wrote. And I have learned that such an expression of intention, even if it is not signed, could be legally binding on a charity. I’m told that the laws are not yet mature on this point, and different judges (or juries) see it differently. Either way, though, a charity shouldn’t count on judicial sympathy. It should, as you suggest, do the right thing. Wouldn’t it be nice if it didn’t matter to your administration whether the donor signed the document? Wouldn’t it be nice if everyone acknowledged what they know – the donor’s intentions – and acted accordingly?
(As an aside, the way you write about the issue makes me wonder if your boss thinks that a gift from an elderly donor is somehow less important than one from a younger person to steward correctly. There may be issues at work here that are not so evident.)
But the issue might not be born solely of budget concerns. Incompetence could also play a role. Far too many charities just don’t track endowed funds they way they should, making the inappropriate expenditure from those funds difficult to identify. Alas, with tight budgets ruling the day and, sometimes, uncaring or unable administrators making decisions, doing the right thing often comes with great difficulty or not at all.
I would get everyone on the same page with the intention that you discuss this with the donor. Mea culpas are uncomfortable, but you actually may have dodged a bullet: you are being given an opportunity to examine the process by which you deal with donors without anyone – except you, in this case – making a real fuss about it. The conversation with the donor needs to be explicit: this is what you wanted and we’re not – or weren’t – doing it. Three things could happen: 1) The donor says it’s okay, that she doesn’t care, in which case she’ll value your honesty; 2) The donor wants her money back; or 3) You, the charity, make sure the money is used the way the donor has expressed. As for #1, you’ll know you’ve been honest. As for #3, you could just do it and then let her know what’s been going on, and every year report the results of the gift, how the money is really being used. Even if she isn’t comfortable with a lot of numbers, you will be able to convey that you are as good as your word. As for #2, make sure #3 is on your to-do list.