As the end of the year approaches, not-for-profits are eagerly soliciting — and accepting — donor gifts. While your first instinct may be to accept all gifts, it may be prudent to turn some of them down due to such factors as space restrictions and unsuitability to your mission. Here’s where a gift acceptance policy can be critical.
A gift acceptance policy provides an objective way to decline a gift but still maintain a good relationship with the contributor. Your nonprofit’s staff can explain to the donor that previously set policy doesn’t allow your organization to accept the gift. In other words, “it’s nothing personal.”
Moreover, a gift acceptance policy contributes to good governance because it disciplines your organization to weigh the advantages and disadvantages of accepting and administering a gift. Although a policy isn’t required, IRS Form 990 asks nonprofits receiving more than $25,000 in noncash contributions whether they have one.
A policy describes what kinds of gifts you welcome and how they’ll be handled. It states your nonprofit’s mission, the policy’s purpose and the types of gifts that should be reviewed by your board or an attorney before they’re accepted. Your policy also should address how gifts you accept will be managed and invested (if applicable) and how you’ll dispose of them.
To write or update an acceptance policy, first perform a self-assessment. You’ll want to determine your nonprofit’s ability to manage each type and form of gift.
For example, you may not be able to accept gifts of real estate because your organization isn’t staffed to manage the property or willing to act as a landlord. Gifts such as closely held stock, life insurance policies and intellectual property may come with valuation and administration complications you aren’t equipped to handle. And certain tangible property, such as furniture and collections, may be unacceptable because you don’t have adequate storage or display space.
Also consider how you’ll treat restricted gifts. Almost all organizations prefer unrestricted gifts so they can use the funds as they wish. But donors sometimes want to specify how their gift will be used.
Getting an outside opinion
Before you submit your gift acceptance policy to your board for approval, talk to us. We can review your draft for issues you might not have considered and suggest ways to strengthen your policy.