Crafting Charitable PledgesCrafting Charitable Pledges

The drafting of charitable pledges, especially those for large amounts, is often mishandled. Why? Because the parties involved don’t consider whether the pledge as drafted will be enforceable or whether the individual making it will want some third person, such as a private foundation (PF), to pay part or all of the pledge. Failure to consider these matters occurs often because everyone is focused on the pledged amount and neglects the tax consequences of the proposed pledge. Failure to consider these consequences can result in unworkable pledges and charities having to return pledge payments. I’ve seen this happen. A recent private letter ruling¹ provides important guidance on the design and drafting of large, enforceable pledges when a...