In the days immediately after the December 26 tsunamis, journalists frequently asked GuideStar, "How can donors be sure their money really is going to be used for tsunami relief?" (Short version of our answer: "Ask the charity before giving.")
A consumer affairs reporter was surprised when a charity's television ad included a disclaimer that some tsunami donations might be used to assist victims of other disasters. Several journalists asked for our reaction when Doctors without Borders and the Red Cross announced they were no longer accepting donations for tsunami relief, although contributions for other purposes were still welcome. (Short version of our answer: "It's an incredibly responsible thing for them to do.")
These conversations led to February's Question of the Month, "Should charities be able to use earmarked donations (those given for a specific purpose or program) for other things?" The answer was a resounding "No":
Although we purposely kept the question broad to invite a range of responses, several themes appeared in the comments.
No—"quot;It Is a Matter of Trust"Most frequently, participants from the "No" camp emphasized that donors must be able to trust the nonprofits they support. "It is a matter of trust," stated Shirley Raymond of Harrison County Community Services, Inc. Linda J. Brown of the National Storytelling Network agreed: "It's a violation of trust, if funds are used for purposes not authorized by the donor."
A substantial number of people described redirecting designated gifts as "unethical." The phrase "bait and switch" appeared several times.
Participants placed the onus squarely on the nonprofits. Daniel Norensberg of the Norensberg Foundation, Inc. expressed the thoughts of many when he stated, "Charities MUST respect the wishes of the contributor. If the charity does not like the idea then it should not take the donation."
On a similar note, Mary Ferrell of the Fairmount Park Conservancy also spoke for many in the "No" camp when she asserted, "Ack! This is fundamental to the trust people have in our sector! We do what the donor tells us with their money, or we send it back to them. Period."
An anonymous participant noted that charities should educate and inform donors: "Donors need to be able to trust that their money will be used as designated. Meanwhile nonprofits should focus on finding ways to share with donors the areas of greatest need."
Several people said that a donor's contribution can be diverted to another use IF the donor gives permission ahead of time. As Peter Ulrich of the Lark Ellen Lions Charities and Opera Buffs wrote, "The donor's request should always be honored unless permission is obtained to use the funds for another purpose."
Bonnie C. Sovinee of the Arc of Somerset County suggested that such cases can present an opportunity for the nonprofit. "If the need changed, the donor should be made aware, and offered the opportunity to learn about the shift. It could be a way for the donor to give additionally."
Sally Luallen, of the Old Cowtown Museum in Wichita, Kansas, concurred. "The donor should know, at least. In some cases donors put so many restrictions on use that it is impossible to use. I have found that if you talk with the donor, many times they will agree."
Finally, Catherine Clark of Sherwood Forest Incorporated recommended looking at the bigger picture: "Donor wishes are paramount. However, if general funding has gone to that budget line, it can always be shifted out to make way for the restricted funds. Money is fungible!"
Maybe—"When the Specific Purpose ... Is No Longer Applicable"The "Maybe" responses also fell into clear categories. Like many of the "No" participants, several "Maybe" respondents stressed the need to get donors' permission to redirect earmarked gifts. Lois Arkin of CRSP noted that donor approval could come "either at the front end of the donation" or "when the npo requests a 'change in use' from the donor later on." In the case of bequests, an anonymous participant advocated "applying to [the] probate court."
Another anonymous participant described a second circumstance when redistribution is appropriate: "When the specific purpose identified by the donor is no longer applicable at the charity. For example, an endowment created 75 years ago for a program that no longer exists today." Don Windham of International Children's Network offered a popular variation on this theme, "If the intended purpose for the donation has already obtained its financial goal." Linda D. Sayers of Auburn University spoke for many "Maybe" respondents when she specified, "The alternate use [should be] as close as possible to the donor's original intent."
Yes—"Times Change"The handful of "Yes" participants echoed points offered by both the "No" and "Maybe" camps. Diana Sieberns of the Wildlife Center stipulated that contributions be redirected "only if [the nonprofits] have donor permission." Several people mentioned that a program might become fully funded.
One anonymous respondent sounded a theme that appeared often in the "Yes" comments: "Times change. What might be an important need one year may not be an issue in later years." This individual suggested, "Donor restrictions should be honored for a period of time but when that need disappears, the restriction should be removed."
Another anonymous participant emphasized that redirecting contributions "should be reserved for certain exceptional situations."
ConclusionNearly three-quarters (74 percent) of the Question of the Month participants identified themselves as nonprofit board members, employees, or volunteers. Their comments demonstrate the keen sense of responsibility people in the sector feel toward their organizations' supporters. That's good news for everyone who is working to increase confidence in the nation's nonprofits.
Suzanne E. Coffman, March 2005
© 2005, Philanthropic Research, Inc. (GuideStar)
Suzanne Coffman is GuideStar's director of communications and editor of the Newsletter.