I recently spoke to an estate lawyer who told me she would never recommend certain charities to clients. Why? Because of the way these charities treated estate trustees. Some charities are unduly litigious, grind on fees, and are obstreperous about releases. It’s not the first time I’ve heard this comment from estate professionals – and some traumatized lay executors and family members.
Sympathy for Charities
It’s hard to evaluate the validity of these accusations. I have worked at four major charities over the last 32 years. I sympathize with charities and their challenges with estate administration. There are administrative delays, clueless executors, double-dipping lawyers, legal challenges, family dysfunction, and in a few cases, outright fraud.
Major charities that are frequently named in wills typically have experienced estate administrators. They all know each other. When named in the same will, they coordinate on administration and legal matters – partly to reduce costs and partly to provide a united front. They try to be responsible and uphold the testator’s charitable intent. This should be applauded.
Yet charities are often treated as second-class estate beneficiaries. That is, not family. These interlopers should be grateful for what they receive and not cause trouble. I’ve heard this view repeatedly over the years and actively repudiate it. Individuals have testamentary freedom, which exist in most provinces. Charitable beneficiaries are not only legitimate, but important to society.
I do know a few charities that have a reputation for being “difficult” in estate matters. The translation of “difficult” is a charity that asks for clear estate accounts and fee justifications. That’s just being professional.
Nonetheless, some charities get reputations. They use litigation lawyers extensively for routine estate matters and are institutionally hostile to executor fees. One charity has been called “toxic and greedy”. Another serves as executor for their donors to reduce costs, blithely ignoring the conflict of interest.
So-called difficult charities conduct business in a way that erodes trust, or at least that is the perception among estate professionals. Some charities estate administration habits damage their reputation in the community, which could ultimately reduce donations. Charities, however, have a duty to be good fiduciaries and protect charitable property from estates. Done right, the fiduciary obligation outweighs the potential reputational risk.