NFP Q&A: Can Charities Return Donations?

Charities may find themselves in a predicament when faced with a decision of whether to return donations. For example, donors may request that donations be returned where donations cannot be applied to the specific purpose (such as the construction of a building) for which the donations were given, where the fundraising target was not met. I asked my colleague Daniel Dochylo to provide some insight on what charities need to consider before returning donations.

Question: Can charities simply return donations?

Daniel: Generally speaking, a registered charity cannot return a donation. The donor is considered to have parted with the property, and the donee, being the recipient of the donation, is considered the owner of that property. Returning a donation has tax implications for both donees and donors.