[chribob]

A registered charity has an existing operation, with staff and a manager, and a prospective new operation, championed by a member of the board. An engineer has done some preparatory work on the new project and has been owed $10,000 for more than three months. The charity is cash tight. When the board member spoke to a supporter about the new project, the supporter said she would donate $1,000 to the charity and direct it to the new project. The board member hoped to pay part of the account with the engineer with the donation. When the manager received the cheque, he called the donor to thank her. He also said that the new project may not need the money for quite some time (untrue, given the past-due account with the engineer), so would she prefer that the money be held in trust or would she agree to release the money to more pressing needs like payroll? She agreed that the money could go to general revenue and be released for any need. The revenue was not attributed to the new project in the accounting system. The manager did not report this to the board, but the member of the board did when he discovered it. How should the board respond to this?

[IM4U]

As I understand...

... the charity has a policy of allowing designated gifts and applying them as designated.

... a gift was designated.

... the manager advised the donor the gift was not needed as designated.

... the manager mis-informed the donor in such advisement.

... the board has become aware the charity's records do not designate the gift as the donor originally intended.

An opinion: If the board is in agreement that funds were indeed needed for the project for which the donor's gift was designated, at the time of the gift, the records should be revised to reflect the donor's original intent, if after contacting the donor and advising him/her that an error had occurred, that is what the donor now prefers.

If the board is in agreement that the manager knowingly and intentionally mis-represented facts in the matter, policy and procedure for such mis-representation should be applied. If, unknowingly and negligently, mis-representation occurred, policy and procedure for that should be applied. Hopefully, the policies and procedures allow for flexibility as the board sees appropriate.

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