December 01, 2012 (Original publish date) • By Dennis Beaver
In memory of dad, a family donates a baby grand piano worth $15,000 to their church and receive a charitable tax deduction.
Fours years later, a power struggle develops and some members decide to form their own church, including the family who donated the piano.
Their son insists the original church return the piano, stating: “Mom wants it for sentimental reasons as she loved dad and realizes how important it is to her.”
It is felt that the piano would surely reappear in the new church.
“Could they successfully go to court and seek recovery of the piano?”the elders asked You and the Law, and we in turn spoke with Missouri attorney Richard Hammar, the editor of Church Law and Tax Report who is recognized as one of our country’s foremost experts on church law.
Blending the skills of an attorney with a profound desire to be fair, to seek justice, and if at all possible, stay out of court, Hammar expressed confidence that the piano will remain where it is.
“Regardless of the religion, church power struggles often result in some pretty bad behavior, often with threats of marching off to court. But that rarely happens — or can happen — and for a good reason which The Founding Fathers of our country understood.
“Thomas Jefferson wrote about the need for a wall of separation between church and state, and the result was to both encourage religious freedom and at the same time to become a barrier, a “You’re Not Welcome Here” doormat, keeping most church disputes out of our courts,” Hammar points out.
“This stems from the concept of church autonomy, central to the First Amendment guarantee of religious freedom which makes courts very hesitant to get involved in internal church disputes, such as this would be.
“Additionally, in our legal opinion, even if a court allowed itself to hear the case, that piano isn’t going anywhere as the law would see it as a gift.”
Want it returned? Watch out for nasty tax consequences
“A gift,” Hammar explained, “is a complete transfer of all of the donor’s rights and title to the item or money donated. To say that the donor has any right to a refund or return of the item is completely contrary to the concept of a gift, unless that right has been specifically reserved in a trust-type document, which is rarely done,” he points out.
“The other significant problem is that returning a gift is contrary to the concept of a contribution to a charity. It would cause tax consequences for the family, requiring an amended tax return to be filed and the church may need to issue a 1099, reporting return of the piano as income. Then there is the problem of inurement — a principle contained n 501(c)3 of the tax code under which churches are exempt. None of the assets of a charity can inure to the private benefit of an individual.
“So, if the church gives up this asset, its tax exempt status is now in jeopardy, and they better set up a refund department when others ask for donations back. If you go down that road, there is no end to it. This would lead to chaos. I would tell them to not even think of going down this road,” Hammar strongly advises.
Do bylaws exist to cover these issues?
Newport Beach attorney Julian Bellenghi specializes in church litigation and agrees with Hammar that “The piano isn’t going back to mom or her family, unless there were some conditions — in writing — attached to the donation, which you just don’t see with these kinds of gifts.
“But when churches split up, at times who gets what has been already set out in bylaws of the greater church organization, if they belong to one. A split off, and determination of who is the real church, will be governed by the bylaws of the existing church or their hierarchal organization to which it belongs, if at all,” he notes.
“And if lawyers get involved? The value of the piano is chewed up in legal fees, which could never be justified,” he adds.
Both Hammar and Bellenghi asked that we take this message to both sides:
“Read First Corinthians, Chapter 6, verses one through 8. Horrible disputes had infected the early church historically. Paul is criticizing the Corinthians for taking these matters to the civil courts, and leaves this message:
“The ultimate principal of our religion is love and that is absent from the courts. Christians who take disputes to the court portray a version of Christianity which is contrary to its most basic tenets.”
We delivered the message.
So, gifts are serious business, but what can happen when a pledged donation isn’t made?
We’ll have the answer next time.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.