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Barrister, Attorney
Category: Business Law
Satisfied Customers: 37017
Experience:  16 years practicing attorney, JD, BA, MBA
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We have been renting a building since 2009, after trying to

Customer Question

We have been renting a building since 2009, after trying to keep things going, it is looking like we may have to close the church. We have some funds left in the general fund. We had a building fund but two years ago chose to put in general fund to try to maintain
If we close the doors what must we do with the funds that are left and if someone left two years ago would we be required to return funds.
Submitted: 2 years ago.
Category: Business Law
Expert:  Barrister replied 2 years ago.
Hello and welcome! My name is ***** ***** I will try my level best to help with your situation or get you to someone who can.
Whether any funds would be required to be refunded to the person who gave the church the money would depend on whether they gave the funds conditioned on them being used for the building fund only or whether they were a general donation. If they were conditioned on being used for the building fund only, then they would have to be refunded as they were a conditional gift and that condition has failed.
If not, then the church administrators can use them for any charitable or operating purpose that they choose.
But as a general rule, most contributions to a building fund are made "designated funds" and are conditional on only being used for expanding the church. They are not to be used for normal operating expenses and are kept separate in an escrow account.
Designated funds cannot be spent on unintended purposes unless a prior written agreement has been established by the church. Without a prior written agreement in the church documents, legally, the only way a church can change the purpose of a designated donation is by court order..
This may also be covered in the Bylaws of the church as to what has to happen to any building funds that are not used specifically for that purpose.