I had always heard that it’s illegal to mess with donor restrictions. I had just taken it for granted that this was a fact and probably would never cause me a problem. I’ve heard of churches that get stuck with an endowment that supports a ministry that the church no longer wants to continue. For example, it used to be a big thing for a church to have their Sunday service on the radio. I think this is still an important ministry, but, now that more and more churches are shifting to online platforms, will there be a day when the radio ministry is no longer wants to do it? What if someone setup an endowment to fund the radio ministry? Can you use the money to to support online ministry instead?
Here’s the most important thing when it comes to these questions: What is in writing at the time of the donation? If the gift was a bequest, what was in the will? If the church solicited donations for the endowment, what did the church put in front of the donor in writing? If the gift was unsolicited, what did the donor write down for instructions?
In most States, the Attorney General is the one tasked with enforcing donor restrictions. In some states, the donor could also take you to court for violating the donor restriction. I’m not sure how often this happens, but it sounds expensive and like really bad publicity for a church to be taken to court for this.
What if the written instructions are no longer possible, relevant, or practical? There are ways to legally change the donor restrictions with or without the help of the donor. That’s what the video dives into.
Useful Links
- Article from Jean Tom & LaVerne Woods: https://www.dwt.com/insights/2020/04/using-charitible-funds-during-covid-19
- North Dakota UPMIFA: https://www.legis.nd.gov/cencode/t59c21.pdf
- South Dakota UPMIFA: https://sdlegislature.gov/Statutes/Codified_Laws/2072975
That is interesting. We have an endowment with restrictions. Did use it toward paying off the church’s loan I believe.
I really like endowments. We work a number of donors and churches on setting endowments up in a way to give the church some freedom in using the money…especially as times change.