Refunding a Contribution
Q: In 2012, one of our board members gave the church a gift of $10,000 with no strings attached (his words). The church provided him with a contribution receipt. We had hoped to put that money toward a building project. Recently, the donor asked if he could have the money back for three months, for an investment. Are we legally obligated to return his gift?
A: Most church leaders eventually are faced with a request from a member to have a charitable contribution refunded. Usually this occurs because of financial hardship. It is a surprisingly complex question, but here are two considerations to help guide you toward an appropriate response:
A charitable contribution is a gift of money or property to a charitable organization. Like any gift, a charitable contribution is an irrevocable transfer of a donor's entire interest in the donated cash or property. Since the donor's entire interest in the donated property is transferred, it generally is impossible for the donor to recover the donated property.