Manage expectations when making charitable donations: Kulish
By Tony Poland, AdvocateDaily.com Associate Editor
A court battle filed by a man unhappy with how his $1-million charitable donation was being administered is a lesson for those who give, and those who receive, Toronto charity and not-for-profit lawyer Taras Kulish tells AdvocateDaily.com.
The Ontario Court of Appeal upheld a lower court decision to deny a benefactor an accounting of a donation he made to set up a workplace mental health program.
Court was told the man gave a $1-million gift, to be paid over three years, and signed a Donor Investment Agreement which set out the terms of the donation including provisions for an annual status report.
The donor “was not satisfied with the progress of the program, the extent of reporting, or the expenditure of the first one-third of the donation during the first year,” according to the court judgment. He requested changes to the content of what was being developed as well as an accounting of the charity’s expenditures, and when the two sides reached an impasse, legal proceedings began, court heard.
Kulish, senior associate with Steinberg Title Hope & Israel LLP, says it’s a case of “a breakdown in the relationship” with no winner.
“It’s like a divorce,” he says. “The donor rolled the dice and lost. Not only did he lose, but the charity lost, the beneficiaries lost. You're going to war here, and when you go to war, everyone loses.”
The man wanted the Office of the Public Guardian and Trustee (OPGT) to investigate the charity to ensure the money he donated was being properly spent, according to the judgment.
The Court of Appeal agreed with the lower court in finding that the application was based on conjecture, “No actual mischief has been identified, and no misuse of funds is apparent from the record.”
Absent evidence of financial misdeeds, the donor “has no particular right to a detailed accounting” of the charity, the court ruled.
Kulish says having an agreement that includes “milestones you have to follow” is essential with large donations.
“You need to have that good communication but also reasonable expectations,” he says.
Kulish, who was not involved in the matter and comments generally, says people who donate to a cause are “giving a gift,” and while they may be entitled to say how the money is being used, they have to let the charity do its job.
“This is another important concept — the charities are the experts. An untrained individual donor can't expect to be able to insert themselves and tell the charity how to do its business,” he says, noting an organization must go through “a rigorous process to get its charitable designation.”
People choosing to make a large donation should do their due diligence and negotiate a donor agreement, Kulish says.
While a person can have input, he says making a donation “doesn't buy benefits other than the fact that they get to say to the whole world ‘I gave a million dollars.’”
“Maybe that's a hard truth. Yes, you are a substantial donor, but the charities are the experts, and that's why you're giving them money,” Kulish says.
It's also important to be patient, he explains, using painting a house as an example.
Kulish says if you don’t do preparation, such as filling in cracks and sanding the walls, the finished work is not going to look its best.
“There is a process, so if you're getting upset because you're not seeing immediate results, that's the same as the homeowner saying 'I'm not seeing colour on the walls,'” he says. “Prep work in anything is essential.”
Kulish says he has “sympathy with the donor in this case.”
“This is a whole ecosystem that has to work together," he says. "This also has to be a lesson for the charity to understand that donor communication has got to be job No. 1.”
While it could be argued they did everything in their power, “You've got to understand and accept that there's always something more you can do,” Kulish says.
“If you’re a director of a charity you get there because you're a smart person, so you've got to figure out what more you can do,” he says. “Is it a cup of coffee? Is it a conversation?”
Kulish says it’s possible that unrealistic expectations may have cost the community a vital mental health program.
“There's an expression in French: You've got to put a little bit of water in your wine, so water your expectations down a little bit,” he says.