Are Gift Agreements Legally Binding

For example, the conservation organization wants to acquire land important to its mission. It has sufficient resources for the deposit, but must rely on donor contributions to pay the balance. Before the risk of losing a non-refundable bond or investing other large sums in due diligence investigations, the conservation organization needs, through donation agreements, assurance that the donor is providing the necessary funds to conclude. A charitable commitment can be implemented if it is a legally binding treaty. There is a legally binding contract if there is an agreement between the parties and a “reflection” has been made in exchange for the commitment. These are referred to as the three essential elements of a treaty. If one of the three is absent, the contract is invalid and unenforceable. The days of “Take my money and do with it what you want” are fortunately behind us. Our charities do so much more when we have real partnerships with donors, because they have so much more to offer us than just their financial support. However, this more engaged relationship requires us to carefully review and document what the donor expects and for the charity to be engaged. Gift agreements, often referred to as declarations of intent, serve explicitly to achieve both objectives.

The restatment (second) of the Contract Act is a legal act designed to inform judges and lawyers of the general principles of contract law. It is one of the most recognized legal treaties in American jurisprudence, as it is the non-binding authority frequently cited in the entire common law of the United States in the area of treaties. In paragraph 90 of this document, it is stated that a promise which the promise giver should reasonably expect to lead to action or leniency and result in such an act or leniency is binding if injustice can only be avoided by the application of the promise. This means that “reflection” is not necessary in the usual sense. And the treaty speaks of the legend that a charitable pledge is binding according to this theory, without proof that the promise in fact induled any act or manslaughter. This is a powerful statement that benefits charities. If an assessment is not voluntary, it is not a deductible gift for federal income tax purposes. This raises the question: if a person enters into a legally binding agreement on the donation of property or cash to an organization, is the contribution still considered voluntary? Fortunately, the courts have confirmed that a donation can be voluntary, regardless of whether its terms of payment are governed by a legally enforceable donation contract.