Giving back doesn’t always mean good things for a charity. The recent case involving the Centre for Addiction and Mental Health (CAMH) of Toronto underscores the responsibility charities have to their donors to achieve results and live up to gift agreements they sign.
The Toronto Star reported on September 29, 2016 that, “CAMH has lost a $1 million donation due to “issues of accountability.” Philanthropist Andrew Faas, the founder of The Faas Foundation, withdrew the grant to CAMH because the organization was unable to demonstrate that the first installment of the donation was used in accordance with his foundation’s goals. “We deeply regret that things have come to this point with CAMH. We awarded the funds in good faith and expected results that were in keeping with the guidelines we agreed upon,” Faas said in a statement three months ago.”
The CAMH news immediately had me thinking about how other executive management and governance boards could avoid situations like this. If you have an opinion or idea on the topic I would appreciate your sharing.
- Regardless of which party initiates the process a charity stewarding the major or ‘transformational’ gift it involves engaging in numerous discussions between the donor and charity over time. Throughout the solicitation process executive management should be asking themselves if the organization has a sincere desire and capacity to meet the conditions attached to the gift and how the organization will leverage resources to fulfill the gift requirements.
- If your organization is fortunate enough to have a donor willing to contribute $1 million dollars the preparations of a gift agreement will surely be part of the partnership. Whether initiated by the donor’s legal team or your own, ensure your gift agreement details all conditions and responsibilities of both parties before signing off and receiving the funds.
- Before accepting any gift installment ensure your organization has established a project management team(s) to execute the terms of the gift agreement. If your organization is expected to partner with other organizations create formal written agreements between the entities that articulate the roles and responsibilities and include them with the donor reporting.
- Ensure your charity operates beyond reproach. Include in your project management processes safeguards like: board reporting, regular internal risk management reviews, financial audits, impartial evaluations and scheduled donor updates.
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