February 26, 1998 | Read Time: 4 minutes
You may have heard the joke about the man who was so moved by the appeal at a fund-raising event that he leaped to his feet and pledged $50,000 to the cause. Everyone at the event was agog at the generosity of the donor.
But as the weeks and months passed and the donor didn’t fulfill his pledge, the charity’s board members became more and more impatient. Then they became angry. Then they sued him. After a long legal battle, the charity won and collected the money.
The following year: same cause, same group, same heart-reading appeal — at which point the same donor leaps to his feet and shouts, “I pledge $50,000 — plus court costs.”
In our litigious society, that old joke isn’t as funny as it used to be. And, as a recent high-profile lawsuit demonstrates, it may not be too far from the truth.
In December of last year, the Museum of Contemporary Art in Chicago sued the former chairman of its Board of Trustees for failing to make good on a $5-million pledge (The Chronicle, January 15). The donor, Paul Oliver-Hoffmann, revoked his pledge, it seems, because of serious disagreements with the way the museum’s money was being managed.
To be sure, the Chicago lawsuit is not without precedent. But now, it seems, more and more non-profit groups are willing to go to court to collect on reneged or unpaid pledges.
In the past, charities were willing to absorb the “shrinkage” of unpaid pledges rather than upset their donors. Non-profit groups were afraid that they would appear ungrateful, or unethical, or that the adverse publicity surrounding the lawsuit would turn donors away. After all, the reasoning seemed to be, it isn’t as though the donor didn’t pay for a house or car he bought. He or she was merely failing to follow through on a pledge to a charity.
Yet philanthropy is not an obligation to be taken lightly. To renege on a pledge for frivolous reasons is simply not acceptable.
Of course, a non-profit organization has to weigh the relative costs and benefits of suing a wayward donor.
But where do you draw the line? At the amount of the reneged pledge? After a certain amount of time spent trying to collect? At the amount of suffering that the pledge caused, such as borrowed money that now cannot be repaid? What about the ethics of the pledge, such as whether the donor really intended to pay or whether he made the pledge for his own selfish purposes?
In most cases, the lawsuits that make their way to the newspapers involve millions of dollars. To be sure, a reneged pledge of $1,000 is not the same as one of $2,500,000. But, on the other hand, why shouldn’t it be? In some cases the pain caused by a lost $1,000 pledge can be devastating. Just ask those who won’t be fed at the shelter next Satur day.
There are real reasons why people must go back on a pledge made in good faith: unexpected financial problems, illness, divorce, family difficulties, use of the pledged money for purposes other than originally proposed by the non-profit group, among others. But whim, petulance, the need for more recognition, and other such demands on a non-profit group are not valid reasons for someone who makes a pledge to renege on his commitment.
It’s not easy for a charity to collect an unpaid pledge. But when the excuses for not being paid are not valid, non-profit groups that have been “stiffed” should go after the money that was pledged — even if it means going to small-claims or civil court. Remember: A donor who doesn’t want to pay his pledge can’t be offended into giving less.
Some advice, however. A charity should be sure that it is on firm ground with its lawsuit. It should not play up its lawsuit in the press. And while someone who made a pledge merely to impress others is not likely to run to the news media with the story, charities should be prepared in case that happens.
A charity that sues with just cause will be applauded, not shunned, by its legitimate donors. Of course, it will be necessary for the charity to let its legitimate donors know what it’s doing and why. If the donors are paying their pledges, they won’t be offended by a charity that pursues unpaid pledges.
A philanthropic pledge is not something to be disposed of when it no longer suits one’s purpose. Rather, it should be considered more binding than a convoluted business contract.
When that happens, we won’t need to add a line for “court costs” on the face of the pledge card.
Irving Warner, author of The Art of Fund Raising and a fund-raising consultant in Los Angeles, is a regular contributor to these pages.
