Charitable Pledge Agreement: Definition & Sample

A charitable pledge agreement is a document that legally binds two or more parties to donate property, money, or services to a charity. For example, a charitable pledge agreement can be used to donate an old car to a local animal shelter or to pledge funds to construct a new elementary school.

It's essential when drafting these agreements that a donor have legal representation, as they are binding documents subjecting donors and their beneficiaries (the charity) to specific obligations. Donors may also want to consult with tax professionals who can help ensure donations will qualify for any applicable deductions.

Common Sections in Charitable Pledge Agreements

Below is a list of common sections included in Charitable Pledge Agreements. These sections are linked to the below sample agreement for you to explore.

Charitable Pledge Agreement Sample

THE MASTERCARD FOUNDATION

THE MASTERCARD FOUNDATION

SECTION I DEFINITIONS

SECTION II THE GIFT

Valuation of the Gifted Shares and Additional Gifted Shares

Management and Control of the Gift

SECTION III CHARITABLE PURPOSE OF THE GIFT

Charitable Purpose of the Gift

Charitable Objects of the Foundation

SECTION IV DONOR ADVICE

Role of the Donor as Advisor

SECTION V RESTRICTIONS ON THE ALIENATION OF THE SHARES

Restrictions on the Alienation of the Gifted Shares

Restrictions on the Alienation of the Additional Gifted Shares

SECTION VI INVESTMENT OF THE GIFT

Acquisition of Additional Shares of MasterCard

No Borrowing on Security of the Gift

No Swapping or Hedging

SECTION VII DISBURSEMENT OF THE GIFT

No Alienation Period and Limited Alienation Period

Unlimited Alienation Period

No In Specie Disbursements

SECTION VIII REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Donor

Representations and Warranties of the Foundation

SECTION IX CHANGE OF TRUSTEE FOR THE Gift

Appointment of Subsequent Trustee

Binding on Subsequent Trustee

SECTION X VARIATION AND DETERMINABLE GIFT

Variation of Terms

SECTION XI GENERAL TERMS

Powers of Foundation

Enurement, Successors and Assigns

Gender and Number

Calculation of Time

Time of the Essence

Entire Agreement, Amendments and Schedules

Agreements With Other Organizations

Transmission By Facsimile

THIS DEED OF GIFT is entered into as of the day of , 2006.

a stock capital corporation incorporated under the jurisdiction of the State of Delaware, U.S.A., having its head office in the City of Purchase, in the State of New York, U.S.A. (hereinafter referred to as the “Donor” ).

THE MASTERCARD FOUNDATION

a non-profit charitable non-share capital corporation incorporated under the laws of Canada, with its head office in the City of Toronto, Province of Ontario, Canada (hereinafter referred to as the “Foundation” ).

WHEREAS the Donor intends to transfer the Gift, as defined herein, in trust to the Foundation to be used for the Charitable Purpose of the Gift, as defined herein, upon the terms and conditions as hereinafter set forth;

AND WHEREAS the Foundation desires to accept the Gift and to stand seized and possessed of the Gift in trust upon the terms and conditions hereinafter set forth;

NOW THEREFORE IN CONSIDERATION of the matters described in the above recitals and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows

In this Deed of Gift or in any amendment hereto, unless the context otherwise requires, the following definitions shall apply, with the defined words and phrases being capitalized in this Agreement for ease of reference:

“Accretions” to an asset means all property, of any kind whatsoever originated therefrom or substituted therefor, including but not limited to interest income, dividend income, and realized capital gains.

“Accumulated Income” means the amount of accumulated income referred to in Section 7.01(b)(i).

“Additional Capital” means the Additional Gifted Shares, Additional Cash Gift and all Accretions thereto referred to in Section 2.01(d).

“Additional Cash Gift” means additional cash gift(s), other than the Cash Gift, made by the Donor to the Foundation from time to time referred to in Section 2.01(d).

“Additional Gifted Shares” means additional gift(s) of shares of MasterCard, other than the Gifted Shares, made by the Donor to the Foundation from time to time referred to in Section 2.01(d).

“Aggregate DQ” means the aggregate disbursement quota during the Ten-Year Period referred to in Section 7.01(d)(ii).

“Annual DQ” means the annual disbursement quota during the Ten-Year Period referred to in Section 7.01(d)(ii).

“Averaging Arrangement” means the arrangement granted by CRA to allow the Foundation the ability to meet its Disbursement Quota Requirements in the Ten-Year Period referred to in Section 7.01(d).

“Capitalized Income” means the capitalized income of the Perpetual Endowment Fund referred in to Section 7.02(c)(iii).

“Charitable Giving Requirements” means the Disbursement Quota Requirements and the Expenses, although such Expenses may or may not qualify as payments for purposes of satisfying the Disbursement Quota Requirements of the Foundation under the ITA.

“Charitable Purpose of the Gift” means the charitable purpose of the Gift referred to in Section 3.01.

“Cash Gift” means cash gift(s) made by the Donor to the Foundation from time to time, totalling up to Forty Million US Dollars (US $40 million) referred to in Section 2.01(b).

“Commencement Date” means the first (1 st ) date of the Unlimited Alienation Period referred to in Section 7.02(a).

“CPI Fraction” means the fraction referred to in Section 7.02(b)(i)(3).

“CRA” means Canada Revenue Agency of the Canadian federal government.

“Date of Donation” means the later of the date of execution of this Deed of Gift and the completion of the initial public offering of MasterCard’s Class A common stock and the listing of such stock on the New York Stock Exchange referred to in Section 2.01(a).

“Deed of Gift” means this deed of gift between the Donor and the Foundation.

“Disbursement Income” means the disbursement income of the Perpetual Endowment Fund referred in to Section 7.02(c)(ii).

“Disbursement Policy” means the disbursement policy of the Foundation in effect from time to time referred to Sections 7.01 and 7.02.

“Disbursement Quota Requirements” means the disbursement quota requirements of the Foundation under the ITA from time to time.

“Donor” means the donor of the Gift, being MasterCard Incorporated, a stock capital corporation incorporated under the jurisdiction of the State of Delaware, U.S.A.

“Expenses” means reasonable expenses required for the operations of the Foundation, included but not limited to salaries, rents, office supplies, advertising.

“Foundation” means the legal entity incorporated as a corporation without share capital under the Canada Corporations Act R.S., 1970, c. C-32 by letters patent dated the 28 th day of October, 2005, and named “The MasterCard Foundation”.

“Fund” means the assets of the Foundation referred to Section 7.02(a).

“Gift” means the Original Capital and the Additional Capital referred to in Section 2.01(e).

“Gifted Shares” means the gift of 13,496,933 shares of voting Class A common stock of MasterCard, and any successor security, in connection with the initial public offering of its Class A common stock and the listing of such stock on the New York Stock Exchange from the Donor to the Foundation pursuant to Section 2.01(a).

“Income” means the amount of income referred to in Section 7.01(b)(i).

“Investment Policy” means the investment policy of the Foundation in effect from time to time referred to Section 6.01.

“ITA” means the Income Tax Act (Canada) R.S.C. 1985, 5 th Supplement, as amended from time to time, and any statute enacted in substitution thereof, and in the case of such substitution, any references in this Deed of Gift to provisions of the Income Tax Act (Canada) shall be read as references to the substituted provisions thereof in the new statute or statutes.

“Limited Alienation Period” means the period commencing on one day after the fourth (4 th ) anniversary date of the Date of Donation until the end of twenty (20) years and eleven (11) months from the Date of Donation referred to in Section 5.01(b).

“MasterCard” means MasterCard Incorporated, a stock capital corporation incorporated under the jurisdiction of the State of Delaware, U.S.A, or its successor corporation.

“Net Income” means the net income of the Perpetual Endowment Fund referred in to Section 7.02(c)(i).

“No Alienation Period” means the period from the Date of Donation until the fourth (4 th ) anniversary date of the Date of Donation referred to in Section 5.01(a).

“Original Capital” means the Gifted Shares, the Cash Gift and all Accretions thereto referred to in Section 2.01(c).

“Permitted Alienation” means the extent to which the Foundation is permitted to alienate or dispose of the Gifted Shares and the Additional Gifted Shares during the Limited Alienation Period referred to in Section 5.01(b).

“Perpetual Endowment Fund” means the assets of the Foundation referred to in Section 7.02(b).

“Remaining Fund” means the assets of the Foundation referred to in Section 7.02(d).

“Section” means a section of this Deed of Gift.

“Ten-Year Period” means the ten year period from the date of registration of the Foundation as a registered charity granted by the CRA to the tenth (10 th ) anniversary date of the date of registration of the Foundation as a registered charity referred to in Section 7.01(d)(i).

“Unlimited Alienation Period” means the period commencing one day after the end of twenty (20) years and eleven (11) months from the Date of Donation and continuing thereafter indefinitely referred to in Section 5.01(c).