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Can charity switch use of contribution?

Your Legal Questions Answered

Can charity switch use of contribution?

A 501(c)(3) charity solicited funds specifically to help victims of a flood obtain food to feed their horses. The organization distributed 1/2 to 3/4 of the $10,000 it raised to help flood victims. Can they now decide they have helped the flood victims enough (even though there are still flood victims who need assistance) and redirect the funds to something else, such as helping people who lost their jobs to feed their horses? I am one of the flood victims still needing help and they have said no.

This is the kind of issue that then-New York Attorney General Elliot Spitzer raised against the Red Cross after the 9/11 tragedy, although the numbers were on a much larger scale.
As a legal matter, it probably depends on how specifically the organization said how it would use the funds and whether there was any “wiggle room” in the language of the ask. A well-written solicitation will include that wiggle room.  If not, it could be a violation of a state charitable solicitation registration law if one is applicable. As a public relations matter, the argument would be based on the overall tenor of the solicitation and the predominant perception of how it said it would use the funds.  Will the local media pick up the story?
In either case, the only person who is likely to have standing to raise the issue legally is the state Attorney General.  With less than $5,000 at stake, and the allegedly misused money being spent for other hungry horses, it doesn’t sound as though even an activist AG would spend many resources on this one.

Tuesday, March 10, 2009

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