Donors Can Sue for Improper Use of Restricted Funds

Key point. Donors who make restricted contributions to a church may be legally entitled to a return of their contributions if not used for the donor-restricted purpose.

A federal district court in Arkansas allowed a group of 185,000 donors to move forward with a class-action lawsuit against a missions agency for allegedly violating its repeated assurance to donors that their restricted contributions would be spent “100%” for the designated purposes chosen by the donors.

Background

A US-based Christian missionary organization (the “defendant”) worked mostly in Asia. To fulfill its charitable purposes, the defendant solicits donations from donors across the world. Each year more than one million unique donations are made to the defendant from tens of thousands of donors in the United States. The defendant then works with its overseas agents to ensure that the donor-restricted ...