Request to return monies arising from a non-profit fundraiser

Our non-profit held a capital campaign to raise funds from our members for the construction of a new facility on land already owned by the non-profit. There were no promises made on the size of the facility, when it would open, etc., just a general understanding that we were working towards building a new facility that our non-profit would operate from.

During the multi-year fundraising period, we ran into a lengthy delay obtaining one permit but the governing agency is now indicating they will approve the permit and so we're going to finish designing the facility and get ready for construction when the permit is issued. During this delay, some members formed a competing non-profit and they have requested that their donations be transferred to their new non-profit for a building program, and they have indicated that they would take legal action if we refuse to transfer their donations to their non-profit.

As there were no strings attached to the donations at the time they were given, and we are continuing to work towards the original goal that the funds were given towards, it would seem that we're under no obligation to transfer the monies to them. I would appreciate any thoughts about what considerations might be relevant and important in a situation like this.

Seems to me that you have two options.

Say no. If they sue, you defend. I don't see where they have any basis for a successful lawsuit.

But if just the threat of a lawsuit leaves you quaking with fear, give them the money back.

Up to you.

Thank you.