‘Forbes’: Protecting Donors’ Wishes

Donors won a major court victory in April, notes Forbes magazine (January 7), when the widow of a benefactor won the right to pursue a lawsuit against St. Luke’s Roosevelt Hospital, in New York. The widow was angry that the hospital sold a mansion her husband had donated to house an alcoholism-treatment program that he helped start with a $10-million gift. Usually, only state attorneys general can pursue a case to block a sale like the one at issue, the magazine points out.

To avoid court tangles over the use of a charitable donation, Forbes suggested that donors take the following steps:

• Put instructions in writing. “Simply putting a note on your check,” says the magazine, “won’t bind the charity.” It adds: “But you can draft a letter explaining the gift’s purpose and asking for a receipt acknowledging your restrictions. If the charity provides that receipt, it’s legally binding.”
• Make contingency plans. When leaving money to charity in a will, donors should have a backup arrangement in case the beneficiary has gone out of business or changed the type of work it does by the time it receives the money. In addition, the magazine warns that donors should think about such issues when they make endowed gifts while they are still alive.
• Appoint watchdogs. Name friends or family members to watch how a bequest is being used. “They can monitor your intent — and threaten litigation if necessary.”
• Be choosy about foundation locations. States are in charge of most charity and foundation regulation, and some states do much more than others to monitor philanthropic funds, the magazine notes. Since foundations don’t have to be set up in a donor’s home state, the magazine says it’s wise to pick a state that is likely to be aggressive in overseeing foundations.

The article is available at http://www.forbes.com.