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What do we do about bounced donation check?

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What do we do about bounced donation check?

I am on the board of a 501(c)(3) high school sports booster club. We have a few parents who have written membership and donation checks to the program that have been returned by the bank for insufficient funds or were written on a closed account. Since donations are voluntary, we do not need to ask for payment on the check amount. However, may we collect the bank fees that we were charged for the returned check, and if so, how do we go about it?

State laws vary on handling bounced checks and you may want to talk with a knowledgeable lawyer or perhaps your bank on what the rules are in your state.  Normally, you should notify the person whose check has bounced promptly and ask for it to be made good. 

The notice may have to be in writing if you want to pursue collection in court.   Simply because the payment was a voluntary gift does not mean that you don’t have the right to cash the check you were given.  You are probably also allowed to add a bad check fee to the payment, the amount of which is often set by state law.

Obviously you don’t have to pursue your legal rights to the fullest, but I think I would let the donor know that the check bounced and ask for a new check and at least your out of pocket costs for the donor’s error.  It may have been an innocent mistake.  If a friendly request doesn’t work, you can consider what further you may want to do.

It would be interesting to know whether other organizations have a policy on this.  Having a policy in advance always helps to remove the likelihood that the decision will be based on the individuals involved.

Tuesday, August 30, 2016
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Comments

Bounced checks are so annoying. I teach the game of bridge at a Recreation Center, for no charge other than books, and even these books are sold at cost (50% of retail). Still, people give me bad checks. I did ask the bridge players for new checks plus the bank fees, and 100% of the players did make the checks and fees whole. Now I take cash only to avoid potential bank fees. I agree with Don's advice. Most people, if not all, are nice about the inadvertent fees. Just ask for a new check plus the fee. In general, your donors will be embarrassed by the request, and make you whole.

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