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Q: A church member donates $2,000 to her church during the first six months of the year. She then becomes upset with the pastor and begins attending another church. She contacts the treasurer of her former church and demands a refund of all the contributions she made earlier in the year. How should the treasurer respond?

A: Answering these kinds of questions begins with an understanding of the fact that a charitable contribution is a gift, and, like any gift, is an irrevocable transfer of a donor's entire interest in the donated cash or property. Since the donor's entire interest in the donated property is transferred, it generally is impossible for the donor to recover the donated property. As we will see, there are a few exceptions to this general rule.

Most charitable contributions are undesignated, meaning that the donor does not specify how the contribution is to be spent. An example would be a church member's weekly contributions to a church's general fund. Undesignated contributions are unconditional gifts. A church has absolutely no legal obligation to return undesignated contributions to a donor under any circumstances.

Often a donor will make a "designated" contribution to a church. That is, the donor designates how the contribution is to be spent. For example, a donor contributes a check in the amount of $1,000 and specifies that it be used for missions, or the building fund, or some other specific project. Many courts have ruled that such designated contributions are held by the church "in trust" for the designated purpose. So long as the church honors the designation, or plans to do so in the foreseeable future, it has no legal obligation to return a donor's designated contribution.

What if a donor contributes money to a church's building fund and the church later abandons its plans to construct a new facility? Such contributions are conditioned on the church pursuing its building program. If it abandons the program the contribution is revocable at the option of the donor. Should the church refund designated contributions to donors under these circumstances? There are a number of possibilities, including the following:

* Donors can be identified. If donors can be identified, they should be asked if they want their contributions returned or retained by the church and used for some other purpose. Ideally, donors should communicate their decision in writing to avoid any misunderstandings. Churches must provide donors with this option in order to avoid violating their legal duty to use "trust funds" only for the purposes specified.

A church should send a letter to donors who request a refund of a prior designated contribution informing them that (1) there may be tax consequences, (2) they may want to consider filing an amended tax return to remove any deduction claimed during any of the three previous years as a result of their designated contribution, and (3) they should discuss the options with their tax advisor.

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