FundSvcs Community

Hi Everyone - I hope you had a good weekend! I wanted to get your thoughts on an issue we've been debating. My VP and our General Counsel feel that all gift agreements should be fully binding contracts that would hold up in court if the donor were to not fulfill their gift. I understand their point, but also know that donors can be skittish about an agreement that is fully binding. I had proposed that gift agreements for capital projects where the university is spending money based on a gift agreement to fulfill a pledge then the agreement should be fully binding to hold up in court. However, in the case of a scholarship (endowed or annual) or planned gift where the university is not spending any money until the donation arrives that we could go with a less technical agreement.

I'm open to what other nonprofits do in these situations.

Thank you

Lisa

------------------------------
Lisa Miller
Director
Lynn University
LMiller@lynn.edu
------------------------------

Original Message:
Sent: 1/8/2023 8:35:00 PM
From: Lisa Miller
Subject: Gift Agreements - Fully Binding Legal Contract or Not?

Hi Everyone - I hope you had a good weekend! I wanted to get your thoughts on an issue we've been debating. My VP and our General Counsel feel that all gift agreements should be fully binding contracts that would hold up in court if the donor were to not fulfill their gift. I understand their point, but also know that donors can be skittish about an agreement that is fully binding. I had proposed that gift agreements for capital projects where the university is spending money based on a gift agreement to fulfill a pledge then the agreement should be fully binding to hold up in court. However, in the case of a scholarship (endowed or annual) or planned gift where the university is not spending any money until the donation arrives that we could go with a less technical agreement.

I'm open to what other nonprofits do in these situations.

Thank you

Lisa

------------------------------
Lisa Miller
Director
Lynn University
LMiller@lynn.edu
------------------------------

Original Message:
Sent: 1/8/2023 8:54:00 PM
From: John H. Taylor
Subject: RE: Gift Agreements - Fully Binding Legal Contract or Not?

First, you may want to discuss how often you have sued a donor. And do you plan on making taking donors to court a regular occurrence?

I suspect you have rarely, maybe never, taken a donor to court, and you likely won't. You will alienate current and future donors.

I agree with your general statement. Endowment agreements typically have a bit more legalese. But most other agreements can be short and sweet. You will find numerous examples in the archives.

John

John H. Taylor

Principal

John H. Taylor Consulting, LLC

2604 Sevier St.

Durham, NC   27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

Serving the Advancement Community Since 1987

Original Message:
Sent: 1/8/2023 8:35:00 PM
From: Lisa Miller
Subject: Gift Agreements - Fully Binding Legal Contract or Not?

Hi Everyone - I hope you had a good weekend! I wanted to get your thoughts on an issue we've been debating. My VP and our General Counsel feel that all gift agreements should be fully binding contracts that would hold up in court if the donor were to not fulfill their gift. I understand their point, but also know that donors can be skittish about an agreement that is fully binding. I had proposed that gift agreements for capital projects where the university is spending money based on a gift agreement to fulfill a pledge then the agreement should be fully binding to hold up in court. However, in the case of a scholarship (endowed or annual) or planned gift where the university is not spending any money until the donation arrives that we could go with a less technical agreement.

I'm open to what other nonprofits do in these situations.

Thank you

Lisa

------------------------------
Lisa Miller
Director
Lynn University
LMiller@lynn.edu
------------------------------

Original Message:
Sent: 1/8/2023 8:35:00 PM
From: Lisa Miller
Subject: Gift Agreements - Fully Binding Legal Contract or Not?

Hi Everyone - I hope you had a good weekend! I wanted to get your thoughts on an issue we've been debating. My VP and our General Counsel feel that all gift agreements should be fully binding contracts that would hold up in court if the donor were to not fulfill their gift. I understand their point, but also know that donors can be skittish about an agreement that is fully binding. I had proposed that gift agreements for capital projects where the university is spending money based on a gift agreement to fulfill a pledge then the agreement should be fully binding to hold up in court. However, in the case of a scholarship (endowed or annual) or planned gift where the university is not spending any money until the donation arrives that we could go with a less technical agreement.

I'm open to what other nonprofits do in these situations.

Thank you

Lisa

------------------------------
Lisa Miller
Director
Lynn University
LMiller@lynn.edu
------------------------------

Original Message:
Sent: 1/8/2023 8:57:00 PM
From: Sarah Thomas
Subject: RE: Gift Agreements - Fully Binding Legal Contract or Not?

Lisa,

We don't use gift agreements as a part of the pledge. We use it for how we are going to administer gifts only. Our gift agreements are fully legally binding but the donor can take us to court if we are not administering it correctly. 

We have the commitment in a different process. You are going to have a very tough time getting a donor to sign an agreement that you can take them to court, if they don't pay their pledge. I have a gift amount in our agreements but it's only for historical purposes. There are times, when I have donors that won't sign their agreement if it even has a gift amount. We do about 500 agreements a year, I would have tons of issues if we went after our donors. I have had to several cases, where I had to get on the phone with the DO and the donor to explain that the gift agreement is not a commitment form. I had a donor one time who wanted me to place in the gift agreement, that we would not go after them if they don't pay. The donor ended up walking away. It was very political. 

As far as naming, we have it in our policy that we can remove the naming if they don't pay. You might want to place something in a policy about endowments and namings, if someone does not pay. I would not place that in an agreement. 

Sent from my iPhone

Original Message:
Sent: 1/8/2023 8:35:00 PM
From: Lisa Miller
Subject: Gift Agreements - Fully Binding Legal Contract or Not?

Hi Everyone - I hope you had a good weekend! I wanted to get your thoughts on an issue we've been debating. My VP and our General Counsel feel that all gift agreements should be fully binding contracts that would hold up in court if the donor were to not fulfill their gift. I understand their point, but also know that donors can be skittish about an agreement that is fully binding. I had proposed that gift agreements for capital projects where the university is spending money based on a gift agreement to fulfill a pledge then the agreement should be fully binding to hold up in court. However, in the case of a scholarship (endowed or annual) or planned gift where the university is not spending any money until the donation arrives that we could go with a less technical agreement.

I'm open to what other nonprofits do in these situations.

Thank you

Lisa

------------------------------
Lisa Miller
Director
Lynn University
LMiller@lynn.edu
------------------------------

Original Message:
Sent: 1/8/2023 8:57:00 PM
From: Sarah Thomas
Subject: RE: Gift Agreements - Fully Binding Legal Contract or Not?

Lisa,

We don't use gift agreements as a part of the pledge. We use it for how we are going to administer gifts only. Our gift agreements are fully legally binding but the donor can take us to court if we are not administering it correctly. 

We have the commitment in a different process. You are going to have a very tough time getting a donor to sign an agreement that you can take them to court, if they don't pay their pledge. I have a gift amount in our agreements but it's only for historical purposes. There are times, when I have donors that won't sign their agreement if it even has a gift amount. We do about 500 agreements a year, I would have tons of issues if we went after our donors. I have had to several cases, where I had to get on the phone with the DO and the donor to explain that the gift agreement is not a commitment form. I had a donor one time who wanted me to place in the gift agreement, that we would not go after them if they don't pay. The donor ended up walking away. It was very political. 

As far as naming, we have it in our policy that we can remove the naming if they don't pay. You might want to place something in a policy about endowments and namings, if someone does not pay. I would not place that in an agreement. 

Sent from my iPhone

Original Message:
Sent: 1/8/2023 8:35:00 PM
From: Lisa Miller
Subject: Gift Agreements - Fully Binding Legal Contract or Not?

Hi Everyone - I hope you had a good weekend! I wanted to get your thoughts on an issue we've been debating. My VP and our General Counsel feel that all gift agreements should be fully binding contracts that would hold up in court if the donor were to not fulfill their gift. I understand their point, but also know that donors can be skittish about an agreement that is fully binding. I had proposed that gift agreements for capital projects where the university is spending money based on a gift agreement to fulfill a pledge then the agreement should be fully binding to hold up in court. However, in the case of a scholarship (endowed or annual) or planned gift where the university is not spending any money until the donation arrives that we could go with a less technical agreement.

I'm open to what other nonprofits do in these situations.

Thank you

Lisa

------------------------------
Lisa Miller
Director
Lynn University
LMiller@lynn.edu
------------------------------

Original Message:
Sent: 1/9/2023 10:48:00 AM
From: Alan S Hejnal
Subject: RE: Gift Agreements - Fully Binding Legal Contract or Not?

I completely agree with John and Sarah.

 

I might also mention that there are specific legal requirements to make a contract binding, which vary by state but generally involve either Detrimental Reliance or Consideration.  So it does occur to me to wonder how your leadership imagines that the agreements would be made legally binding.

 

Which does not, of course, in any way affect the primary point, that it is a Really Bad Idea.

 

My US$0.02 worth; the usual disclaimers apply.

 

Good luck!

 

Alan

 

Alan S. Hejnal    (he/him/his)

Data Quality Manager

 

 

Original Message:
Sent: 1/8/2023 8:57:00 PM
From: Sarah Thomas
Subject: RE: Gift Agreements - Fully Binding Legal Contract or Not?

Lisa,

We don't use gift agreements as a part of the pledge. We use it for how we are going to administer gifts only. Our gift agreements are fully legally binding but the donor can take us to court if we are not administering it correctly. 

We have the commitment in a different process. You are going to have a very tough time getting a donor to sign an agreement that you can take them to court, if they don't pay their pledge. I have a gift amount in our agreements but it's only for historical purposes. There are times, when I have donors that won't sign their agreement if it even has a gift amount. We do about 500 agreements a year, I would have tons of issues if we went after our donors. I have had to several cases, where I had to get on the phone with the DO and the donor to explain that the gift agreement is not a commitment form. I had a donor one time who wanted me to place in the gift agreement, that we would not go after them if they don't pay. The donor ended up walking away. It was very political. 

As far as naming, we have it in our policy that we can remove the naming if they don't pay. You might want to place something in a policy about endowments and namings, if someone does not pay. I would not place that in an agreement. 

Sent from my iPhone

Original Message:
Sent: 1/8/2023 8:35:00 PM
From: Lisa Miller
Subject: Gift Agreements - Fully Binding Legal Contract or Not?

Hi Everyone - I hope you had a good weekend! I wanted to get your thoughts on an issue we've been debating. My VP and our General Counsel feel that all gift agreements should be fully binding contracts that would hold up in court if the donor were to not fulfill their gift. I understand their point, but also know that donors can be skittish about an agreement that is fully binding. I had proposed that gift agreements for capital projects where the university is spending money based on a gift agreement to fulfill a pledge then the agreement should be fully binding to hold up in court. However, in the case of a scholarship (endowed or annual) or planned gift where the university is not spending any money until the donation arrives that we could go with a less technical agreement.

I'm open to what other nonprofits do in these situations.

Thank you

Lisa

------------------------------
Lisa Miller
Director
Lynn University
LMiller@lynn.edu
------------------------------