Lead Stories

An appellate court in Minnesota has told a trial court that it must make its own determination whether a former executive of a nonprofit corporation is entitled to an advance of funds to pay legal fees and costs for defense against the organization’s claims against her for fraud, conversion, breach of fiduciary duty and breach of contract. The Court said the state’s Nonprofit Corporation Act requires it to make an independent judgment when the board has refused the request.

An appellate court in New York has held that donor-restricted gifts to a museum are not generally available to pay creditors upon dissolution of the corporation.  It has required an endowment to be kept intact to support an historic village, but has permitted a ceramics collection to be sold, if possible, subject to the terms and conditions of a loan and gift agreement with the original donors. (In the Matter of Friends for Long Island’s Heritage, Supreme Ct. of NY, App.

A black woman from Nigeria who claimed age, race, and gender discrimination when she was terminated from her nursing position by a nonprofit long-term care facility has seen her case dismissed by a federal District Court in New York. 

Donors who used a donor advised fund to make college loans to their son have been denied a charitable contribution deduction and ordered to pay capital gains taxes on stock sales within the fund plus an additional 20% penalty for underreporting of income tax due.  The Tax Court has affirmed the decision of the Internal Revenue Service.  (Gundanna v. Commissioner, 126 T.C. No. 8, 2/14/11.)

In 1998, the donors transferred nearly $264,000 to a “family public charity” at the xélan Foundation after the husband sold his interest in a medical practice at a substantial gain.

Despite a finding that a public charity failed in any way to satisfy a donor’s charitable goals with a donor advised fund and breached the implied covenant of good faith and fair dealing, the donor has no right to damages or rescission, the Supreme Court of Nevada has ruled.  (Styles v. Friends of Fiji, No. 51642, 2/8/11.)

The donor made a donor advised fund gift to Friends of Fiji, a Nevada nonprofit corporation that operated primarily out of California.  Under the provisions of a donor advised fund, a donor makes a gift to a public charity and is given the right to recommend how the funds will actually be used, usually through grants to another charities.

An administratively dissolved church corporation is not liable for a note and mortgage on its property executed by a member of the church who incorporated a new entity with the same name but was not authorized to make the transaction, according to the Court of Appeals of Georgia.  (Macedonia Baptist Church of Atlanta v. LIB Properties, No. A10A1736, 2/9/11.)

The Macedonia Baptist Church of Atlanta, Inc. was originally incorporated as a nonprofit corporation in 2001 and acquired title to its church property from the previously unincorporated church association.  In 2005, the corporation was administratively dissolved by the Secretary of State for failure to pay required fees.