Kansas City Art Institute Sues Calif. Couple for $5 Million Unfulfilled Pledge

They say their lifestyle has "completely changed" since the company shut down. They borrowed money from friends and family and are selling belongings on eBay. They don't own any cars though they do still have real estate assets, which can't immediately provide them with cash.

They said they can't afford childcare, or a lawyer.

Though they say they did their best in filing a response to the lawsuit, paying filing fees and showing up for depositions, they still missed a court filing deadline to respond to the college's amended complaint. Missing that deadline led to a default $3.3 million judgment against them in May by the California Superior Court of Orange County, which the Dodges are now appealing.

The Dodges have been subpoenaed to appear for a debtors' exam on Dec. 13 during which they will be asked about their finances.

The Dodges say the nonprofit would not return their calls about trying to work out an agreement before the lawsuit. Meanwhile, they said a few other nonprofits to whom they had pledged money sympathized with their financial plight.

"The others have been absolutely amazing. Their care and concern has been the complete opposite of the Kansas City Art Institute," Dodge said. "It really restores our faith in humanity. Rather than having the vultures circle, they have asked what they can do to help."

Dodge said he wants to avoid bankruptcy though it is a possibility if his appeal is unsuccessful.

"We're still in our home," Kristina Dodge said. "Knock on wood."

Initially, she said she might have been willing to sell the home to help pay the obligation to the art institute. But she said the art institute's actions have made her less willing.

"So I decided I'm not giving up my home anymore," she said.

The Kansas City Art Institute maintains that they had a financial responsibility to recoup the $5 million, which was committed to cover the majority of the building's cost.

"The decision to proceed with a court action was not undertaken lightly, but our board concluded that it was necessary for KCAI to uphold its fiduciary responsibilities as a college and as a nonprofit organization," Canfield said in a statement.

She points out that nonprofit organizations are required by the Financial Accounting and Standards Board to report pledges on their accounting statements as a way to show all assets and resources, and failing to act to collect on could show a deficit in accounting and affect future pledges.

"Fiscal accountability is of utmost importance to KCAI," she said. "In this particular case, seeking to enforce this pledge is necessary in order for us to be accountable to all our donors who so generously support us, as well as to the students we serve in fulfilling our educational mission."

Holly Hall, features editor at the Chronicle of Philanthropy, said other nonprofits have gotten into legal tangles with donors over pledged money, but it is rare.

In January, a jury ordered a nonprofit hospital to return a $500,000 gift to the country music singer, Garth Brooks. The singer had sued Integris Canadian Valley Regional Hospital in Yukon, Okla., his hometown, over a disagreement over what to do with his $500,000 gift.

The donation was initially anonymous in 2005, but Brooks later requested that the hospital name a women's center after his mother, who died of cancer in 1999.

The hospital had to give back the $500,000 but also pay another $500,000 in damages, creating unwanted publicity and the need for clearer agreements between donors and charities, Hall said.

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