Nonprofit Myths: #11 - Taking Gifts Back

Starting and running a 501(c)(3) tax exempt nonprofit is a lot of work and not everyone is cut out for it. Some go into the venture with false assumptions and myths and only later find out they didn’t understand what they were getting themselves into. Let’s examine some of those myths.

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Myth: If I give a building, vehicle, computer, book I wrote, or whatever to the nonprofit and later close the nonprofit, I can just change the copyright, deed, or title back into my name again, or take the property back.

 

Truth: When an asset of any kind becomes the legal property of a nonprofit, it can never go back to the person who donated it. If the nonprofit closes, the asset must be given to another nonprofit, or the court can decide the disposition of the asset. In no case can it go to an individual. There have been instances of a gift being returned but those generally have to do with a nonprofit failing to use the gift as intended.

 

Moral of this Myth: If you want to retain a claim on physical property, loan it to the nonprofit, do not deed it or gift it. Once it is gone, it is gone forever, and you have no claim to it. If instead you choose to loan it, the organization gets the benefit, but you still own it. That includes books. Keep your book copyright in your own name, and donate royalties if and when you want to, but don’t give your book to the nonprofit. You cannot get the rights back later.

 

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"Nonprofit Myths" is a 12-part series by Dr. Kitty Bickford, founder of Pasture Valley Children Missions. As a nonprofit consultant, Dr. Bickford has provided guidance to thousands of nonprofit leaders in best practices for setting-up and effectively running their organizations. We're also proud to claim Dr. Bickford as an alumna of The Grantsmanship Center. 

© Copyright 2020 Kitty Bickford, DBS, CPC     Used  with permission

 

For further delight and edification, here's a short series on board development:

Who's On Your Board?     Where Can You Find Board Members?     What Does a Board Do?