Proactive Steps to Stay Out of the Headlines

You may also want to include a paragraph that states that while it is your intention to honor the donor's designation, if circumstances arise that your prohibit that, you will seek the donor's counsel before reallocating the gift.

Be honest — beginning and ending
Sometimes, in our eagerness to get a donation, we can promise too much. It is critical that the leadership of the organization agrees on what can be done for gifts of certain amounts. Don't create your own disaster by committing to something that you know deep down is impossible. You only create a scenario full of potential problems in the future.

Even if your initial presentation of the gift opportunity was accurate, things can go wrong after you receive the gift. A project has to be abandoned because of circumstances that you didn't anticipate when you raised the money. Government regulations delay the project — sometimes permanently. A lack of funding forces your board to reorganize priorities and eliminate certain projects.

Talk to the donor before he or she reads about it in your publication or the newspaper. Explain what the situation is, and have a few alternatives to offer for reallocating the money to a project that reflects the donor's interests or addresses a pressing need. Apologize, but don't blame anyone else.

Assume the donor will want to see the gift used by your nonprofit for an acute need, and don't open the door for him or her to consider otherwise. However, if the donor asks about the return of the gift, be prepared to make a strong case for reallocating it. Your goal is to rekindle his or her passion for an alternative option.

Does your nonprofit have procedures in place to help prevent misunderstandings that could escalate to headline-grabbing lawsuits? Share your proven ideas in the comments.