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Refund Policy

  • 1.  Refund Policy

    Posted 17 days ago

    Hello,

    We recently came into a situation where a clinical trial at our organization has been deemed no longer viable. A donor who has contributed a significant amount specifically for this trial has now begun conversations over the possibility of a refund for the remaining unused funds of her donation. Unfortunately, at the time the gifts were made although sizable no gift agreement was executed.

    We have not had to issue any refunds over several years and was wondering how folks have typically handled? This has also brought up the need to create a more clearly defined refund policy. Are there any refund policies that anyone would be open to sharing?

    Thank you! 



    ------------------------------
    Monica Banea
    Gift Services Manager
    Moffitt Cancer Center
    ------------------------------


  • 2.  RE: Refund Policy

    Posted 17 days ago
    At the last meeting of the Records Management Best Practices Committee meeting (I am the current chair), I announced that I would draft a Best Practices document for aasp on this topic.  That will not help you now.  However, you are not alone in this struggle and hopefully, the BP will help others in the future.

    It does need to be stated that requiring a gift agreement for a major gift before accepting a gift is the first step in a good policy.  You know that already.  But even without that gift agreement your gift acceptance policy should have at least a brief mention.  So, for the short term, I suggest you add a paragraph to the GAP that indicates that any request for a refund must be approved by the Gift Acceptance Committee.  And, that if the Committee does not include the CFO or VP of Finance, they are invited to this discussion.  There are possible tax implications.  You also do not want to set a precedent that will open doors for many other similar requests.

    Most policies I have reviewed state clearly that refunds are not issued unless the charity has made an error.  After all, a gift is only a gift if it is made irrevocably (IRS).  Here is one example:


    Also, here are a couple of quotes from an article written by author Michael Rosen on the topic, referencing a similar policy at Penn State:

    "The boards of nonprofit organizations should adopt a donation refund policy. Typically, the policy will not allow for refunds of donations. That's the policy that's been in place at Penn State."

    "The only time nonprofit organizations are required to refund a donation is if the organization violates the terms of the gift. Otherwise, the decision about refunding is up to each individual nonprofit though state authorities may step in to protect the public interest.

    "The best thing all nonprofit organizations can do is minimize the circumstances that can lead a donor to request a refund. To mitigate the risk of a refund request, organizations should use gift agreements, honor donor intent, and adhere to the highest ethical standards."

    My advice, in this case, is to work with the donor to identify an alternate use for the unexpended funds.  Hopefully, she recognizes that gifts are irrevocable, and that tax deductions have likely been claimed.  Unraveling that can be tricky.

    Meanwhile, I will work hard on writing that BP!

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Refund Policy

    Posted 17 days ago
    Is there documentation of the gift restriction?

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 4.  RE: Refund Policy

    Posted 17 days ago
    Isaac, you did not include the original email.  So, you may not have seen the statement that there was no gift agreement.

    If there had been one I sure hope it included a savings clause as any good gift agreement should!

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 5.  RE: Refund Policy

    Posted 16 days ago

    I appreciate the thorough and helpful  response John. We will definitely look to adding updated language to our GAP to include a more defined refund policy. I also look forward to seeing your BP on this topic and glad to know we are not alone on this struggle.  Thanks again!



    ------------------------------
    Monica Banea
    Gift Services Manager
    Moffitt Cancer Center
    ------------------------------