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Monday, March 19, 2012

Garth Brooks

Posted by Armanino Nonprofit Team

You are very likely asking yourself right now what in the world does Garth Brooks have to do with nonprofit accounting and why is he the title of this week’s blog entry? Before I answer that question, let me ask you a question. Does your organization accept restricted gifts? If your answer is yes, then my answer to what Garth Brooks has to do with nonprofit accounting is…


The February 9 issue of the Chronicle of Philanthropy reported that Garth Brooks recently won a lawsuit against a nonprofit hospital in the amount of $1,000,000, which consists of the refund of his original $500K gift AND $500K in punitive damages.

Below is a quick summary.

Garth Brooks originally gave the hospital an anonymous donation of $500K in 2005. At the time of the donation, the hospital and Garth Brooks discussed several possible uses of the funds, including the naming of a to-be constructed women’s center of the hospital, but the hospital maintained they had decided on nothing. Later, Garth requested that that center be named after his mother. Hospital officials told him that $500K was not enough for naming rights to the building and tried to get him to restrict the use to some other projects for the hospital.

Garth maintained that he had an oral agreement with the hospital president to name the women’s center after his mother. He requested a refund of the gift and the hospital denied it, stating that their policy to not refund unrestricted gifts. Next step ….. lawsuit.

So what should you take away from all this?

1) How complete and detailed is your organization’s gift acceptance policy? (If you want some insight into this, see Leslie Carballo’s blog post on gift acceptance policies).
2) If a donor asks for a refund, do it.
3) Document, document, document. If your organization receives a large gift, document the terms of acceptance with the donor in writing and have the form endorsed by the Executive Director and the donor.
4) Accounting for restricted gifts is not just the responsibility of the CFO, but also the Director of Development and Executive Director as well!

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