Nonprofit Strategies: Selling an asset must be done carefully

barry@sloccf.orgFebruary 23, 2012 

In my most recent column, a nonprofit board was considering stabilizing the organization’s finances by selling a parcel of land.

At least one, longer serving, member of the board recalled that the donor of the land stipulated that the nonprofit keep and maintain the land as a public park.

Questions the board must explore are:

• What are the terms of the gift as presented in gift or transmittal documents?

• Did the donor make any modifications that the organization accepted after the gift was made? Today it is very easy for a donor to send an email saying in effect, “What I really meant was. …”

• If the land is kept, what other options are available for stabilizing the organization’s budget? This includes exploring partnerships to maintain the land as a park.

For example, the city may not be able to buy the park, but it may be able to mow the grass.

• If the land is sold, what will the nonprofit’s donors and the general public think?

The original gift document carries the most weight in the board’s deliberations.

In a perfect world, the donor and the organization signed a document that specifies the terms of the gift, including that the nonprofit will maintain the land as a park in perpetuity.

Absent any documentation, however, the organization and the donor must rely on its memories of who said what when.

Without clear documentation, the gift may be considered to have no restrictions .

Public perception of the nonprofit’s obligations are important.

Initial understanding may transform into resentment and distrust of the organization.

The board may want to consult the state Attorney General’s Office about what process it must follow; the attorney general is authorized to enforce donor restrictions.

A court may need to formally alter the terms of the gift.

Barry VanderKelen is executive director of the San Luis Obispo County Community Foundation.

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