A donor potential may have a legitimate claim for breach of fiduciary duty and fraud against both the the organization and the individual members of the Board if a deduction taken by a donor were disallowed. In addition, even if the deduction were not disallowed, a donor may claim that the donor was misled into believing that the organization was a tax-exempt organization and that the donor would not have made the donation if accurate information had been disclosed. In our opinion an affirmative duty to disclose does exist. In addition, a donor may seek rescission to force the organization to return the donation based upon a claim that the misrepresentation that the charity is a qualifying organization nullified the bargained for consideration.
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