"'To see this money essentially wasted and these promises not fulfilled — it's a real tragedy,' Laurie Styron said [of the onePULSE Foundation]."
"'When it comes to small individual donations — generally speaking, people are out of luck,' she said [with respect to whether or not donors should expect refunds of their contributions]."
"So, I've been doing watchdog work for about 20 years now, and unfortunately this is not a rare occurrence," Styron said of onePULSE not honoring the intentions of its donors related to its promise to build a museum.
'There are a lot of rules and laws in place that dictate that charities have pretty narrow choices when it comes to how to distribute restricted funds or unrestricted funds, even when they're a nonprofit organization," Styron said of any funds that the charity is required to distribute as part of its dissolution.
"'A lot of times that money is long gone,' Styron said. 'It's been spent on other things, whether it's other programs or on overhead. In most cases, charities have pretty wide latitude to spend the contributions they receive as long as it's for some charitable purpose, or at least related to the mission.'"
"'It's unlikely that there would be a lot of money left over to refund those smaller donations to the general public, once all of the fees related to winding down the organization are incurred,' she said."
"'[Those donations] have to be used for what the charity says they will be used for, and if they're not, there's typically a contract in place that requires the charity to refund those donations or that otherwise outlines what happens if the charity fails to fulfill its promises,'" Styron said of time or purpose-restricted funds that were legally restricted by higher dollar donors.
Is a charity required to refund my donation if I request it?
Generally speaking, the answer is unfortunately "no." Donors who give unrestricted contributions are generally not entitled to receive a refund of their donation to a charity. In fact, some charities have policies in place stating that they do not refund donations.
This is one reason that it is so important to check out a charity prior to making a donation.
Are there any exceptions?
Donors who legally restrict their contributions to be used for a specific time period or purpose generally do have recourse to recover their donations if a charity fails to meet the conditions of such restrictions. This rule generally applies to larger donations for which there is a contract in place specifically outlining how the donation may be used.
For example, say a charity received a $200,000 individual, foundation, or government grant to provide subsidized child care to low income families. If the charity disregards the income eligibility requirements of the grant, or spends the grant funding on something else, such as building a playground, the donor may be entitled to a refund. In other cases, depending on the terms of the donation agreement, the charity may be required to pay back those funds into the relevant restricted account in lieu of issuing a refund.
Bottom Line
Many charities, particularly smaller ones, operate on shoestring budgets and spend the donations they receive very quickly. Even well-funded charities often have tight budgets and quickly commit the donations they receive to fund their ongoing operations. An ounce of prevention is worth a pound of cure is a proverb that very much applies to donors when they are making decisions about which charities are worthy of their support.
View CharityWatch's Top-Rated list to identify an efficient and responsible charity working in a cause important to you.
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