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Can I get my money back from fixing up church for sale?

Your Legal Questions Answered

Can I get my money back from fixing up church for sale?

There is a beautiful church that was going to be demolished. I tried to buy the building but they wanted to donate it to a nonprofit. I quickly started a nonprofit and they donated the church to our new 501(c)(3) charity.  My plan had always been to fix it up and sell it. Now that I have it ready to sell, I’ve realized that I can’t just pull the money out of the 501(c)(3).  I find out that I have to keep the money in a charity.  I really need to get my money back from this project. What am I to do?

You say the church gave the building to “our” charity, which suggests that you had others involved from the beginning.  Assuming that the others have been on a board of directors, it may be legitimate to ask them what they understood to be your role in the development.  Were you lending the money expecting to be repaid?  Were you acting as the project manager expecting compensation?  Do you have any contemporaneous documentation of either of these relationships?

From your description of the situation, however, it sounds like you were acting as an individual entrepreneur, expecting to flip a free building into a significant personal profit.  You don’t want to fabricate evidence of a relationship that did not exist.  It would be a breach of fiduciary duty to the charity that could get you and your friends on the board into a lot of trouble with the attorney general.  Whatever the stated purpose of your organization, it isn’t intended to give you a significant personal profit.

Unfortunately, you may just have to learn from your experience that a charity is not formed for the benefit of the founder but to provide goods or services for the benefit of the public.  Next time you may need to do a little more research before you spend your time and money on an activity that can’t yield the result you want.

Tuesday, September 3, 2019

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