What You Need to Know About Pledges

Authored by Nevena Urosevic, Associate Director of Legal Affairs

A pledge, in and of itself, received by a charity, is not a contract and is unenforceable in a court of law. This has been illustrated by a recent Globe and Mail investigation into the $23 million in unpaid pledges made to the Royal Ontario Museum. The ROM, which owes the Ontario government $33 million in loans for the project, has incurred penalties for missed loan payments and has had to pay more interest than expected because of the unfulfilled pledges. See the articles here:

• Crystal Myths: Behind the ROM’s philanthropic façade
• Non-profits need clear donor rules, national group says

An Ontario Superior Court case[i] confirmed that a pledge to make a gift is not the same as a contract and will only be enforced in rare circumstances. One such circumstance is where the charity can prove detrimental reliance; however, courts are reluctant to find same.

As such, it is important for charities undertaking large projects, such as construction, to make sure they do not rely on large pledges and commence such projects, only to find that they cannot complete them because of a lack of fulfillment of pledge promises. For more information on how to make pledges work for your charity, see CCCC’s Stewardship Handbook, Vol. 2 at pgs. 275-278

References

[i] Brantford General Hospital Foundation v. Marquis (2003), 67 O.R. (3d) 432 (OSCJ)