Refunding Contributions to Donors

Legal precedent for returning contributions is limited.

Church Finance Today

Refunding Contributions to Donors

Legal precedent for returning contributions is limited.

Background. Occasionally, a church member will ask to have his or her contributions returned. This can occur for various reasons. The member may move, change churches, experience a change in doctrine, or question church leadership or policies. Is a church required to return contributions to donors who request them under any of these circumstances? Very few courts have addressed this question, and so definitive guidance is lacking.

A recent case. A church member (Paul) sued his church seeking a refund of property he had donated to the church. He claimed that members’ contributions were not a product of their free will; that the pastor’s teaching on giving was based on a “misrepresentation of the Bible” and was fraudulent; and, that the pastor knew that his teaching was false and that members relied on it.

A trial court ruled that the civil courts are prohibited from resolving church disputes requiring the interpretation of church laws and practices, and from interfering with ecclesiastical and administrative church matters. As a result, it dismissed the case.

An appeals court affirmed the trial court’s dismissal of the case. It concluded that “this is an ecclesiastical dispute in which this court is prohibited from interfering.”

Relevance to church treasurers. Few courts have addressed the issue in this case, and so the court’s opinion is important. The court concluded that the civil courts are barred by the First Amendment guaranty of religious freedom from resolving demands by church members to have their donations refunded when the resolution of such a demand would require an interpretation or application of church doctrine, or involve a court in the internal governance of a church. Hawthorne v. Couch, 2006 WL 3734350 (La. App. 2006).

This article first appeared in Church Treasurer Alert, March 2007.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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