Conrad Teitell, in his Philanthropy Tax E-Letter, writes about the law of charitable pledges. His article begins as follows:
At its annual banquet, a major charity calls out the name of each attendee who then stands and announces the amount he pledges to the annual campaign.
One guy refused to satisfy his pledge; the charity sued him and won. Mistakenly, he was invited to the following year’s banquet and he attended. When his name was called, he stood and said, “I pledge $100,000—plus interest and court costs.”
State law determines a pledge’s enforceability. And, unless a pledge agreement specifies the applicable state law, a conflict-of-laws issue can arise if the donor and the charity are in different states.
Pledges have been held binding on one or more grounds:
• The pledge is an offer to contract that becomes binding when work obligated by the pledge has begun, or the charity relying on the pledge has otherwise incurred liability.
• The consideration for the donor’s pledge is its support by pledges of others.
• Donor’s pledge has induced other pledges.
• The charity’s acceptance of the pledge imparts a promise to apply the funds according to the donor’s wishes, and his pledge is supported by that promise.
• Public policy requires the donor’s liability on a pledge.
Read full article at: The Law of Charitable Pledges | Philanthropy Tax E-Letter
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.