Key point. The word contribution is synonymous with the word gift, and since no gift occurs unless a donor absolutely and irrevocably transfers all title, dominion, and control over the gift, it follows that donors who make an undesignated contribution to a church have no legal right to a refund.
A California court ruled that a church is not obligated to return undesignated contributions to donors absent fraud or mistake.
A church member (the “plaintiff”) sued his church seeking a refund of contribution he had made to the church on the ground that his contributions were “converted” from legitimate church use to the inappropriate and unauthorized expenses including the purchase of a home, furnishings, landscaping, cars, clothes, a swimming pool, a Jacuzzi, and other items. The trial court disagreed, and the member appealed.
A state appeals court noted that the elements of conversion are “the plaintiff owns or has a right to possession of personal property; defendant disposed of the personal property in a manner that is inconsistent with the plaintiff’s rights; and damages.” However, “where plaintiff neither has title to the property alleged to have been converted, nor possession thereof, he cannot maintain an action for conversion.”
The question is whether the plaintiff “had title to or possession of the money, or whether he relinquished both title and possession by making valid gifts. If he made valid gifts, then the trial court did not commit error because he could not establish the requisite title to or possession of the money. If he did not make valid gifts, then the trial court’s ruling is not supported by its logic.”
The court noted that there are three requirements for a valid gift: “There must be an intent on the part of the donor to make an unconditional gift; there must be an actual or symbolical delivery that relinquishes all control; and the donee must signify acceptance.”
The court concluded that the plaintiff
failed to establish that any of the necessary elements of a gift are missing. He suggests he did not intend to make unconditional gifts of money because he was deceived. But he misses the point. Even if he was deceived, he was induced into making unconditional gifts. He indicates in his brief that he gave the money for “specific non-profit needs within the church,” and his “giving was akin to a conditional gift, with the specific intent that he was not giving up ownership of his monies as if he was tossing those funds in the trash.” Thus, he suggests that the money was converted because it was not used as he intended. . . . To dispel the plaintiff’s notion he has a conversion claim, we highlight that his gifts were unconditional because they were present transfers. He may have wished his money to be used in a specific way, but he relinquished all control. To the degree he communicated his wishes, the church may have had a moral obligation to honor those wishes, but it did not have a legal obligation.
The court added that the plaintiff “cannot be heard to complain that he was left with no remedy if he was, in fact, deceived by [the church].” It pointed out that “if a donor’s intent is induced by mistake or fraud, the gift may be rescinded or set aside in an action in equity. Consequently, the plaintiff could have sued to rescind or set aside his gifts,” but “a conversion claim was not a viable substitute.”
What this means for churches
Most churches have been confronted with a donor asking for a return of his or her contributions. Such requests usually are generated by a decision to change churches or a financial emergency. For whatever reason, such requests can be perplexing. Church leaders often do not know how to respond. This case reflects the conclusion that most courts have reached when considering the legal basis of donors’ requests for a return of some or all of their undesignated contributions. As this court noted, there generally is no legal basis for honoring such requests since charitable contributions constitute “gifts,” and gifts represent an irrevocable transfer of all of a donor’s right, title, and interest in donated funds or property. Therefore, there is no legal justification for donors to reclaim donations they previously made for which they have no more legal interest to support a request or demand for a refund.
However, this court mentioned two possible exceptions to this general rule. First, donors who make a designated contribution for a stated purpose (e.g., building fund) may have a legal right to enforce their designation. And second, the court suggested that donors may be able to reclaim a contribution based on fraud or mistake. Lewis v. Double Rock Baptist Church, 2017 WL 491693 (Cal. App. Unpub.).