Bill Alexander Speaks on Charitable Giving
A Charity’s Guide to Navigating Gifts from Aging Donors
Charitable giving is a cornerstone of a meaningful legacy, allowing donors to support the causes they care about deeply. However, for development officers and non-profit organizations, accepting gifts from older donors requires a heightened level of awareness and sensitivity. Understanding the legal issues surrounding a donor’s capacity is not just an ethical obligation; it is essential for protecting both the donor and the integrity of their intended gift.
Understanding a Donor’s Capacity
In North Carolina, the law recognizes a difference between legal incapacity and diminished capacity. A person may have some memory issues or physical frailty but still possess the “sufficient capacity” required to make a gift. The key is whether they understand the nature and consequences of their actions. Development professionals should be aware of the signs of diminished capacity and take steps to ensure a donor’s intent is clear and well-documented.
The Threat of Undue Influence
Undue influence occurs when a person in a position of power or trust uses their influence to manipulate a vulnerable adult into making a gift they would not otherwise have made. This can be a major risk, especially when a family member, caregiver, or even another advisor is heavily involved in the donation process. If a gift is later challenged in court on the grounds of undue influence, it could be invalidated, creating a difficult situation for the charity and the donor’s family.
How a Power of Attorney Plays a Role
A Power of Attorney is a document where a person (the principal) grants a trusted agent the authority to make financial decisions on their behalf. However, this authority is not unlimited. A critical question for any charity is whether the donor’s Power of Attorney document specifically grants the agent the authority to make charitable gifts. A generic document may not include this power, and accepting a gift from an agent who is acting outside their authority can create significant legal problems. This is a key reason why a comprehensive review of a donor’s estate plan is so important.
Protecting the Donor and Their Gift
When dealing with an aging donor, establishing and documenting their intent as early as possible is the best protection. This involves open communication and, when appropriate, working with the donor’s legal counsel. An elder law attorney can help navigate these sensitive issues, whether by confirming a donor’s capacity, reviewing a Power of Attorney, or exploring situations that might require a guardianship.
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