Charitable Subscription

Contracts Law.  A charitable subscription, also called a charitable pledge, is a donor’s written or oral promise or statement of intent to contribute money or property to a charity.

Enforceability of Charitable Subscriptions/Pledges

In cases where the donors back out, the issue becomes whether the charitable subscriptions are legally enforceable contracts/promises.  Generally, courts enforce charitable subscriptions.

Some courts focus on the pledge’s purpose.  If the pledge was solicited and promised to be used for a specific purpose, then consideration (or reliance) is present and the courts would enforce the pledge:

  • Massachusetts:“A series of decisions has found legal consideration in the traditional sense in the charity’s agreement to appropriate funds in accordance with the terms of the subscription . . . A second rationale enforces the pledge because of the charity’s reliance on the promise, such as its expenditure of money, labor, and time in furtherance of the subscription.”  In re Morton Shoe Co., Inc., 40 B.R. 948, 950 (Bankr. D. Mass. 1984).
  • Ohio“Accordingly, the consideration for a pledge to an eleemosynary institution or organization is the accomplishment of the purposes for which such institute or organization was organized and created and in whose aid the pledge is made, and such consideration is sufficient. We, therefore, conclude that pledges made in writing to eleemosynary institutions and organizations are enforceable debts supported by consideration, unless the writing itself otherwise indicates or it is otherwise proved.”  Hirsch v. Hirsch, 289 N.E. 2d 386, 390 (Ohio App. 1972).
  • Louisiana“In contracts of beneficence, the intention to confer a benefit is a sufficient consideration.”  Dillard University v. Local Union 1419, Intern., 144 So. 2d 710, 713 (La. App. 1962).
  • California: “The trend of modern authorities is to uphold subscriptions to charity, and similar causes, whenever that can be done without overstepping entirely established rules requiring consideration. Consideration is supplied where, upon good faith of the subscriptions, moneys have been expended, liabilities incurred, or work performed. Other courts have found consideration in the mutual promises of the subscribers . . . Where a proposed gift is stipulated by the donor to be devoted to some particular purpose, and is accepted with that condition attached, a special obligation in respect to that particular fund ensues, and will satisfy the requirements of a consideration.” First Trust & Savings Bank of Pasadena v. Coe College, 47 P.2d 481, 483 (Cal. App. 1935).
  • Maine“[T]he implied promise contained in the acceptance of a proposed gift upon the conditions upon which it is offered, as for instance, to apply the gift to the purposes specified in the offer, is a valid consideration for the promise to give. One promise supports the other, without incurring any expense or other obligation to the detriment of the promisee, except the obligation to carry out the trust it has agreed to assume in accepting the gift, and which it can in equity be compelled to fulfill.”  Central Maine General Hospital v. Carter, 132 A. 417, 418 (Me. 1926).

Other courts uphold charitable pledges as a matter of public policy:

  • Iowa“We believe public policy supports this view. It is more logical to bind charitable subscriptions without requiring a showing of consideration or detrimental reliance.”  Salsbury v. Northwestern Bell Tel. Co., 221 N.W. 2d 609, 613 (Iowa 1974).
  • New Jersey“The great bulk of the jurisdictions, including New Jersey, hold that a charitable pledge constitutes an enforceable contract . . . The real basis for enforcing a charitable subscription is one of public policy–that enforcement of a charitable subscription is a desirable social goal . . . If a charitable subscription is disguised as a contract in order to effectuate a public policy, logic would dictate that the law should not then permit the institution of a contractual defense to undermine that policy.” Jewish Fed. v. Barondess, 560 A.2d 1353, 1353-54 (Super. N.J. 1989).

In an ALR annotation surveying the cases on this topic, the author described an evolving law.  Previously, courts would pay “lip service” to traditional contract law by purporting to require consideration.  But even those courts would quickly “expand their views” of what constitutes consideration when the recipient is a charity.  Courts in the “modern era” forgo that charade and simply enforce charitable pledges as a matter of policy.  Donaldson, Russell G., Annotation, Lack of Consideration as Barring Enforcement of Promise to Make Charitable Contribution or Subscription, 86 A.L.R. 4th 241 (1991).

Related entries