• Is a “pledge” legally enforceable? That was the issue before a New Jersey state appeals court in an important case. An individual pledged to give a specified amount of money to a religious organization, but later changes his mind. The organization filed a lawsuit seeking a court order compelling the individual to honor the pledge. A trial court ruled in favor of the organization, and the individual appealed. The state appeals court began its opinion by noting that “the great bulk of [states], including New Jersey, hold that a charitable pledge constitutes an enforceable contract.” This rule admittedly has created some confusion, since an enforceable contract generally consists of an exchange (each party gives and receives something of value). But what benefit does the donor receive in exchange for his or her pledge? Why should a pledge be viewed as an enforceable contract rather than as an unenforceable statement of intent to make a gift? The court reviewed a number of theories that have been used to support the characterization of pledges as enforceable contracts, but found none of them satisfactory. It candidly observed that “the real basis for enforcing a charitable [pledge] is one of public policy—enforcement of a charitable pledge is a desirable social goal.” The court continued: “Lightly to withhold judicial sanction from such obligations would be to destroy millions of assets of the most beneficent institutions in our land, and to render such institutions helpless to carry out the purposes of their organization.” In conclusion, most courts view the enforceability of charitable pledges as socially desirable, and accordingly they characterize them as “contracts” in order to ensure their enforceability even though it is doubtful that they qualify as valid contracts. The New Jersey court correctly observed that charitable pledges are “disguised as a contract in order to effectuate a public policy.” Whether based on contract law or public policy, most courts view charitable pledges as legally enforceable commitments. Obviously, few religious organizations would consider suing a donor to enforce a pledge. On the other hand, religious organizations often incur sizable obligations (buildings, missions commitments, etc.) in reliance upon pledges, and they may be able to persuade reluctant donors to recognize their moral obligation to honor their pledges if they realize that the courts view pledges as binding legal commitments. Jewish Federation v. Barondess, 560 A.2d 1353 (N.J. Super. 1989).

© Copyright 1989, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m08 c0689