I am grantwriter working with a rural healthcare organization that launched a $ 2 million capital campaign a couple of years ago to build an inpatient facility adjacent to the sole hospital in the county (for-profit). The facility will serve a four-county region. The host county is very resource-poor, but a neighboring county has a well-developed industrial sector and several foundations. Because the organization is not well-known in that county and the facility will not be physically housed there, we have not been successful in raising funds from that county.
About $600,000 has been pledged from foundations, corporate giving programs and individuals; $300,000 of that has been received and expended to purchase and develop the building site and for an architect to develop construction drawings. The hospital in the county, has not been supportive of the project, and has not contributed anything, which has proved to be a major barrier, although the project with actually benefit them. Due to the funding shortfall, and because the organization recently incurred a large debt, they are considering either: 1) canceling the project outright, or; 2) suspending the project until we find another building site in the next county, and have developed a partnership with the hospital there, which has shown a much greater commitment to community development.
Leaving aside the huge public relations problems this will cause, I have two questions for readers. Regardless of which option is chosen, we will have to return all gifts already received, unless donors are willing to wait until the project goes forward, or are willing to allow their funds to be used for patient care.
What are the tax consequences for donors who have already made their donations? Will the agency have to make any notification to the IRS re: refunded donations? Has anyone here gone through a similar situation, and were any private foundations willing to have their funds rediverted?
Thank's in advance...