Contributions must be used for purposes consistent with the donor’s intent, whether as described in the relevant solicitation materials or as specifically directed by the donor.
When a donor responds to a charitable solicitation with a contribution, he or she has a right to expect that the funds will be used as promised. Solicitations should therefore indicate whether the funds they generate will be used to further the general programs and operations of the organization or to support specific programs or initiatives. A donor may also indicate through a letter, a written note on the solicitation, or a personal conversation with the solicitor or another official of the charitable organization how he or she expects the contribution to be used.
Before accepting a gift, the organization should review whether the gift is consistent with the organization’s gift acceptance policy (see Principle #30) and should ascertain whether the donor has stipulated any specific terms for the use of the gift. If the organization will be unable or unwilling to comply with any of the terms requested by a donor, it should negotiate any necessary changes prior to concluding the transaction. Particularly in the case of substantial contributions, the recipient should develop an agreement that specifies any rights it may have to modify the terms of the gift if circumstances warrant. Some charitable organizations include provisions in their governing documents or board resolutions indicating that the organization retains “variance powers,” the right to modify conditions on the use of assets. Such powers should be clearly communicated to donors through a written agreement.
If the organization accepts a gift that the donor expects will be maintained in a separate account or fund over which the donor expects to have advisory privileges as to the distribution or investment of those funds, it may be defined as a sponsoring organization of a donor advised fund. In such cases, organizations should consult with legal advisors regarding specific Form 990 and other reporting requirements and rules applicable to sponsoring organizations that hold donor advised funds particularly with regard to transactions with donors, either directly or by organizations receiving gifts from a donor-advised fund.
In some cases, an organization may not receive sufficient contributions to proceed with a given project or it may receive more donations than it requires to carry out that project. If the organization is unable or unwilling to use the contribution as stated in its appeal or in the donor’s communication, it has an obligation to contact the donor and request permission to apply the gift to another purpose or offer to return the gift. Charitable organizations should strive to make clear in materials that solicit contributions for a specific program how they will handle such circumstances.