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Is the local Archdiocese exempt from charitable giving laws?  The Archdiocese just completed a five year capital campaign for each diocesan high school.  Each school had a school specific case statement.  Now that the campaign is over, the Archdiocese has announced the closing of three schools.  Shouldn't the donors (of millions of dollars) be given the opportunity to redirect the funds or have them returned?  What laws govern?

Let’s start with charitable solicitation registration laws.  Typically such laws exclude churches and integrated auxiliaries from the requirements of such laws, not only the registration requirements but the other substantive requirements of those laws as well.

That does not mean that they aren’t subject to any laws.  Although charitable solicitation registration laws normally carry prohibitions on misrepresentation and misapplication of gifts, states also have general misrepresentation statutes and common law prohibitions.  The church is not exempt from those rules. 

Whether there was a misrepresentation in your case, of course, depends on the exact language of the solicitation.  Was there “wiggle room” in the requests to generally support parochial schools, or the right to apply the funds to other purposes?  Did they know at the time of the request that they were going to close down the three schools? 

In most states, the donor does not have standing to contest the alleged improper use of donated funds—only the state Attorney General, or perhaps the local prosecuting attorney, has such standing.  You can make a political issue out of it within the church, or you can ask the Attorney General or prosecuting attorney to investigate and take action.  But in seeking redress from a governmental official against a mainstream church, don’t hold your breath.

11/18/2009