Designated Gifts: The Right Way

What do you do when a significant designated gift no longer fits with the program and priorities of your synagogue?

Linda Cohen is a long time congregant who loves the organ. 15 years ago, she made a $25,000 contribution to the synagogue so that a new organ could be purchased to enhance the music at Shabbat and High Holy Days Worship. Since that time, piano and guitar have been the instruments of choice most often at Worship. The organ is used for one or two prayers at the High Holy Days, and at the Classical Reform Shabbat Worship, which, depending on the year and interest, may or may not happen. The Cantor would love to get rid of the organ that is seldom used and is just taking up space at the corner of the Bima. And Linda is still a congregant who splits her time between Florida and this community where she raised her family and has lived for more than 30 years. Whenever she is at Shabbat Worship, she always asks the clergy about why they are not using the organ more.

Bill and Elaine Goldberg are asked to give the initial gift to kick off a capital campaign to renovate their synagogue. They gladly agree to do so, and contribute $100,000 worth of stock with one stipulation: that a plaque be put up in the lobby in honor of the congregation’s long time rabbi, Rabbi Ruben. 18 months later, Rabbi Ruben retires and a new much younger rabbi is hired. Some buildable land becomes available in a part of town where many young families are moving. The leadership decides that it is in the best interest of the synagogue to purchase the vacant property, sell its current building and build a new, more functional building based on current needs. The leadership approaches the Goldbergs and asks if their contribution can be used as a down payment for the new property. They become irate, as this is the first they are hearing about the new building. They refuse and ask that their contribution be returned.

These vignettes are based on real stories. Maybe the clergy and the leadership of the synagogue with Linda and the organ could have involved her more in the planning and evolvement of music at their synagogue. Make her a member of the Religious Living Committee or the Music Committee. Be sure that the cantor gets together with Linda for coffee on occasion. Ideally, Linda should be an advocate for all musical initiatives at synagogue, not kept in the dark about change that can make for discomfort.

The Goldbergs, too seem to have been left in the dark. They signed a gift agreement that stated how their gift was to be used. Now the synagogue’s new leadership, board and rabbi, want to go in a different direction. In legal terms, the gift agreement is binding. I always suggest that provisions in a gift agreement be inserted that allows for some flexibility should program priorities change. If such a proviso was in the Goldbergs’ agreement, the situation is still problematic. Another opportunity where transparency would be helpful.

A refund of a contribution made in a prior year can be a pain. You have to consult with a CPA. The Goldbergs have already taken a tax deduction for this gift on their taxes. Should the synagogue return the money, it also has to issue a statement akin to a 1099 that the Goldbergs received the money.

Communication, transparency and ongoing engagement with donors are key. As well as language in gift agreements that allows for flexibility for usage with a change in program priorities.

If you want to get into the weeds on this issue, check out this recent article on this topic.