Court Orders San Francisco United Way to Repay $4.7-Million

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Author: Nicole Wallace
Date: Nov. 1, 2007
From: The Chronicle of Philanthropy(Vol. 20, Issue 2)
Publisher: Chronicle of Higher Education, Inc.
Document Type: Article
Length: 1,096 words
Lexile Measure: 1520L

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Byline: Nicole Wallace

The San Francisco Superior Court has awarded Network for Good -- an organization that collects online gifts for charities nationwide -- more than $4.7-million in damages in its lawsuit against the United Way of the Bay Area that stemmed from the 2003 collapse of PipeVine, a donation-processing organization set up by the United Way.

The United Way of the Bay Area maintains that it has done nothing wrong and is not responsible for the losses Network for Good suffered when PipeVine imploded.

Nonprofit legal experts say the decision shows the care charities need to take when setting up additional corporate entities.

The decision by the court was preliminary. Both sides have two weeks from the date the ruling was issued, October 19, to file objections, something the United Way says it plans to do. The court will then issue a final ruling after reviewing the comments.

Network for Good, a nonprofit organization in Bethesda, Md., had a contract with PipeVine to process the donations made through its site. After PipeVine folded, Network for Good used its own money to make good on $2.4-million in contributions that PipeVine had collected but not distributed to the charities for which they had been intended.

The court determined that Network for Good was entitled to damages based on nine of the 15 legal charges it brought against the United Way, including two counts of breach of contract, fraud and deceit, breach of fiduciary duty, and unjust enrichment.

"Because the evidence demonstrates UWBA's significant role in the events leading up to that collapse, it would be inequitable to allow UWBA to escape responsibility for such conduct,"...

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