Stale or Redirected Checks

NFG Disbursement Process for Stale or Redirected Checks.

NFG’s disbursement approach is that if a check does not get disbursed successfully the first time, we try in several ways to get it to the intended nonprofit (NPO). We even allow NPOs that try to cash stale checks to receive those donations if the NPOs are in good standing with the IRS (more details about this are below). In some situations where a single donor is easily identifiable, we also reach out to the donor as a courtesy to see if they would like to recommend a different charity if the original NPO is not eligible or accessible to receive the donation.

However, in order to minimize transaction processing costs and keep our transaction fee low, we direct the funds to the Generosity Fund if we are unable to find a resolution in any of the ways listed below. The Generosity Fund is used to help many other charities in more large scale ways. For instance, we are able to provide matching funds to encourage effective nonprofits to raise more money, as well as run campaigns that help NPOs to build relationships with recurring donors so that the NPOs can have a sustainable foundation.

The reasons disbursed checks may be redirected or go stale after the first donation attempt are the following:

1. The Nonprofit (NPO) is revoked by the IRS
2. Check was sent to incorrect NPO mailing address
3. The NPO requests that the check be redirected to another nonprofit
4. The NPO returns the check with no explanation
5. There is no response from the NPO and the check goes stale after 6 months

Actions that NFG takes are the following:

1. NPO is revoked by the IRS

• If NFG discovers that an NPO is revoked by the IRS before sending out a check,
  • then NFG will contact the NPO to alert them that we are holding a pending donation until they are in good standing with the IRS. If they do not respond, we wait until the check goes stale and the funds go into the Generosity Fund.
  • If we identify that an NPO has been revoked by the IRS before the check is disbursed, but we do not have contact information for the nonprofit, we alert the donor to redirect his/her donation. If we do not get a response from the donor, the donation goes into the Generosity Fund.
• If NFG discovers that an NPO is revoked by the IRS after sending out a check,
  • NFG lets the check go stale and directs funds into the Generosity Fund. If the NPO does not respond to NFG but tries to cash a stale check, we are alerted by our bank and if we discover that they are back in good standing with the IRS, we honor the check and disburse the funds from the Generosity Fund.

2. Incorrect NPO mailing address

• If an NPO returns a check because the donation details show that it was meant to go to another nonprofit and accidentally sent to them, NFG automatically redirects the check to the right NPO.

3. NPO requests that the check be redirected to another nonprofit

• If an NPO returns a check and requests that it be sent to another nonprofit, NFG redirects the funds to the NPO recommended by the original NPO.

4. NPO returns check with no explanation

• If an NPO returns a check but does not provide an explanation, NFG researches if the check was from one donor or multiple. If it’s from one, NFG contacts the donor and redirects the funds according to the donor’s recommendation. If there are multiple donors, the funds get directed to the Generosity Fund.

5. There is no response from NPO and the check goes stale 6 months after the issued date.

• Funds go into the Generosity Fund
• However, as previously mentioned, if an NPO ends up trying to cash a stale check, as long as the check hasn’t been reissued, and the underlying donations have not been cancelled (e.g. credit card dispute), we will honor the check. 
• NFG executes a regular stale check research process for donations that originated 2 calendar years prior. During this process, if we discover checks that are for large sums, we research the NPOs’ addresses and try to re-issue the donation.