Bankruptcy vs. Safeguarding Donor Intent?

It is common for tension to arise between donors and institutions with regard to preserving donor’s intent. Recently, this issue has gained notoriety. The economy has reduced institution resources leaving institutions, like museums, in financial distress. Institutions in financial need often consider selling donated items, which can be against the donor’s intent. Experts are claiming donors of the complete political spectrum are concerned about preserving their intent. President of the Philanthropy Roundtable, Adam Meyerson asserts that “‘A respect for donor intent is essential for philanthropic integrity.'” Since donations are usually what keeps an institution like a museum going, administrators typically fulfill a donor’s wishes loyally. In most states, the attorney general is in charge of donations to charitable organizations.

However, many courts are attempting to find the delicate balance between philanthropic integrity and the financial crisis that many institutions face. Consequently, some courts have allowed museum administrators to break conditional gift provisions. As a result, consultants and nonprofit organizations have worked hard to help donors draft wills and donation documents that improve the chance the recipient of the donation carries out the donor’s intent. In fact, founder of a philanthropic consulting firm, Jeffery Cain has written a free guidebook to assist people giving gifts and alleviate some of the concerns about gift management over time.

See Patricia Cohen, Museums Grapple With The Strings Attached To Gifts, New York Times Art & Design, Feb. 4, 2013.

Special thanks to Jim Hillhouse(Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.