2017-12-18 00:00:00 Selling English Set terms on your charitable donations to nonprofit organizations with conditional giving. Learn what counts as conditional, and how to... https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/12/22103203/Speaker-Explaining-Conditional-Promise-Listener.jpg What is a Conditional Promise to Give?

What is a Conditional Promise to Give?

1 min read

A conditional promise to give is a pledge to a nonprofit that will only be recognized if specific terms are met by a specified time. For example: a local business may promise $20,000 for upkeep of the local park, but only if the park authority can register at least 12 volunteers to maintain the grounds by the end of the year. In this case, if the authority manages to sign up all of the volunteers by December 31, it has a right to recognize the gift. If it falls short and only recruits 11 volunteers, then under the conditions of the gift the donor has no obligation to follow through with his offer.

Conditional giving may be partial, as when a pool of donors promises to give $10,000 to a cancer charity, and then to make a continuing contribution of $1,000 a month if the charity opens its books to an independent accounting firm for annual audits. In this case, the initial gift of $10,000 was offered unconditionally, and the charity can have it no matter what, but the continuing support is conditional upon the audits. The charity may refuse the audit, and the donors may rescind their offer of $1,000 a month without breaching their promise.

The line between conditional and unconditional giving may be thin at times, but in general, a gift is conditional if it meets specific criteria:

  • The pledge sets an explicit matching requirement, indicating that the gift will be directly tied to the condition
  • The pledge specifies a set of outcomes in advance
  • The pledged gift will be returned to the donor if the conditions are not met
  • No well-informed person can know in advance of the conditions being met exactly how much will be given, as there exists the possibility of falling short of donor requirements.

Conditional giving is popular among donors, and nonprofit organizations are typically experienced in handling them. For a layperson making such a gift, or wishing to know whether a given pledge is conditional or not, the words ‘subject to,’ ‘provided that’ and ‘if/when’ are usually a sign that the gift is subject to conditions.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Dealing With Sexual Harassment

As a manager or business owner, it’s your moral and legal duty…

Read more

What is a Cliff Vest?

Imagine this bad scenario as a small business owner. You offer a…

Read more

Expanding and Financing Your Accounting Business

Deciding to expand your accounting firm is an exciting step, and one…

Read more