Background. Church treasurers occasionally are asked to return a charitable contribution. In some cases, the request comes directly from the donor. In other cases, the request comes from a bankruptcy trustee. This article will review both kinds of requests, and provide church treasurers with guidance on how to respond.
Key point. Church treasurers must not treat donors' requests for a return of their contributions as simply a "public relations" matter. There are legal and tax issues that must be addressed in addition to any desire to "keep donors happy."
Requests from donors. Have you ever had a donor ask you to return a contribution? Many church treasurers have had this experience, and have not known how to respond. You should be familiar with the following rules:
(1) undesignated contributions
Most charitable contributions are undesignated, meaning that the donor does not specify how the contribution is to be spent. An example would be a church member's weekly contributions to a church's general fund. Undesignated contributions are unconditional gifts. This means that they are an irrevocable transfer of a donor's entire interest in the donated funds. Since the donor's entire interest in the donated property is transferred, the church has absolutely no legal obligation to return undesignated contributions to a donor under any circumstances. In fact, there are a number of problems associated with the return of undesignated contributions to a donor. These include: