Most gifts your organization receives will be straight-forward contributions of cash, or possibly securities such as stock or bonds. Occasionally, you may run into a situation where donor would like to make an unusual contribution, such as real estate, artwork, or other physical goods. It’s wise to have a gift acceptance policy in place to guide your decision about whether to accept a donation.
A donation may raise a red flag if accepting it would run counter to your values, or if you’re not equipped to dispose of it or manage it on an ongoing basis. For example, if someone wants to give you real estate, a vehicle, or other large asset that you don’t have an immediate need for, you could sell it to get cash, but that may be difficult or time-consuming, and you may have some expenses while you hold it, such as insurance or maintenance. If a proposed gift would be restricted in a way that would be difficult for you to administer, you may not want the hassle of it. A contribution from a controversial donor could carry reputational risks.
A gift acceptance policy should include guidelines to help you evaluate the potential risks, costs, and benefits of gifts before you accept them. A well-written policy can help avoid relational damage with a donor if you turn down a gift, and also avoid unwanted costs of upkeep on a donation of real estate or other property. Write up what criteria you’ll use to evaluate gifts, as well as who will decide whether to accept them. Staff may have the expertise to evaluate some or all of them, or the decision may lie with the board of directors. You may need to consult legal or tax counsel in some cases if it would carry risks to your organization or your tax-exempt status, or if you need advice in complying with terms or restrictions put on the gift by the donor. If there are contributions that you would or would not be willing to accept under any circumstances, spell that out in the policy.
The level of detail in the policy, and the nature of the criteria you use, will vary based on the needs of your organization and the types of donations you receive. Depending on how frequently you receive gifts that would fall under the policy, determine whether it should be made public, such as on your website, or if only staff need to have a copy, and share it with donors as needed. A few details you may include in the policy are:
- Endowment Funds: Do you have a required minimum for setting up an endowment fund to justify the costs of tracking and administering it?
- Planning Giving: Will you accept gift annuities or charitable remainder trusts? Do you have any requirements about the minimum amount of the gift or what types of assets you’ll accept?
- Restricted Gifts: Will you accept restricted gifts? How will you determine whether you can meet the donor’s requirements? You should have a written agreement with donors spelling out what the gift can be used for and what will happens if the original purpose becomes impossible or impractical; will you return the gift or can it be used for similar purposes?
- Donor Recognition: If you have a practice of recognizing donors, what are the criteria for being recognized, and how will they be recognized for different levels of giving? If you offer naming opportunities for certain gifts, spell out what can be named and in exchange for what level of giving. Do you include in-kind giving in giving levels for donor recognition? Can giving be accumulated over multiple years to reach the specified giving levels?
You should review your gift acceptance policy periodically to make sure it still fits your needs and is consistent with your values.
You can find additional information and guidance from the National Council for Nonprofits and Public Counsel. NCfN also has sample policies with varying levels of detail depending on the needs of your organization.