[SEllzey]

This isn't really a Raisers Edge question...but I'd like to hear how others handle requests for "refunds" of contributions. It can be anything from "I lost my job and need the money back" to "I had no idea THAT was what your organization does and it offends me!" How do you handle the request, is there any legal issue with it, what do you say to the donor? Thanks.

[Anne Marie]

We do not refund charitable gifts.

I do not know what the IRS' position on this is, but it is not legal in Canada to give back gifts.

This is how the Canadian government views it: (Canada Revenue Agency)

"In most cases, a registered charity cannot return a donor's gift. At law, a gift transfers ownership of the money or other gifted property from the donor to the charity. Once the transfer is made, the charity is obliged to use the gift in carrying out its charitable purposes."

I assume it is similar in the US with the transfer of ownership, but perhaps not.................

There is an exception - if you raise the funds for a particular project and the project is never carried out - and will be impossible to ever be carried out, ownership of the gift can revert to the donor. But this does not include the reasons you gave.

Of course if this is strictly memberships, that may be different. You use the word contribution, so I assume it is a gift rather than a membership.

[JBeckland]

I have encountered this situation several times in the past, and we have always refunded the donor. They have always been membership-level gifts in the tens or hundreds of dollars, not major gifts. The goodwill it brings is worth more than the gift. We have always told the donor that we hope they will consider making a gift in the future, and left it at that.

If it were a major gift, and there was a pledge agreement or a memo of use of the gift, it would really be a question for a legal department or representative.

[Michael Sherman]

You may be required to issue a 1099-Misc to your donor if you are refunding in excess of the IRS current minimum value. I don't know what it is for 2008, but in 2007 it was $600. The instructions are here:
http://www.irs.gov/pub/irs-pdf/i1099msc.pdf

At the very least you need to tell the donor to contact their tax advisor regarding the refund. If the gift was made last year the IRS will look at the refund as income.

[Melissa Siobhan]

It can get complicated. If it is beyond the tax filing deadline for the year the gift was made I would seek legal advice as Michael said it may involve issuing a 1099 to the donor.

Normally if the request is made rather quickly I would simply request that the donor return the receipt and then process the refund. I have rarely had a donor ask for a normal conribution back - typically, I have had to process event ticket purchases which is partially a contribution.

[Matthew]

I would just add that whatever you decide, this should be included in you Gift Acceptance Policy and documentation for gift adjustments.