Gift Acceptance Policies

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Should your nonprofit accept every gift that comes its way? It's hard to say 'no thank you!' to donors, but sometimes...that's the more prudent path.

There are some kinds of gifts (think horses, houses, and hospitals, as just 3 examples) that your nonprofit simply may not want to - or should not - accept. Some gifts may result in more hassle and expense than benefit to the organization. This is where a well-considered "gift acceptance policy" can be a help.

Manage expectations with gift acceptance policies

A written gift acceptance policy can help manage the expectations of donors, (while treating them with respect) and also serve as guidance for board and staff members who are either on the asking, or receiving, end of contributions. The most significant reasons to adopt a gift acceptance policy include:

  • Accepting some types of gifts may run counter to the nonprofit's values - so a gift acceptance policy can be useful to underscore why the nonprofit cannot accept the gift.
  • Some gifts may lead to legal obligations that the nonprofit is not otherwise ready to handle. Example: Gifts of real property may raise property tax issues; gifts of motor vehicles or boats may raise issues about disposal of hazardous waste or licensing issues.
  • The nonprofit may simply not be equipped to either use, or dispose of certain types of gifts (such as donations of outdated computers) or easily maintain. (Imagine receiving a gift of a race horse!) 
  • Having a gift acceptance policy in place is considered a "best practice" from multiple perspectives - whether relating to relationships with donors, or managing the nonprofit's own risks.
  • The IRS Form 990 asks whether a nonprofit has a “gift acceptance policy” and requires nonprofits that respond “Yes” to complete Schedule M, as well as report any non-cash contributions/in-kind gifts.

Practice Pointers

  • Why does your nonprofit need a policy? Some may question the need for such a policy, especially if your nonprofit normally only receives gifts by cash or check. However, you never know when an unusual gift will arrive. Having a written policy that is adopted by the board will help expedite a process that otherwise might be delayed, and provides volunteers and staff with a consistent way to handle unanticipated and unusual situations. A policy also de-personalizes the situation for staff members on the front-line of receiving a unusual gift who may be in the awkward position of explaining to a donor that the nonprofit will not automatically accept the donor's gift.
  • "Non-Standard Contributions" are defined by the IRS as the "contribution of an item that is not reasonably expected to be used to satisfy or further the organization's exempt purpose and for which (a) there is no ready market to liquidate the donation to convert it to cash and (b) the value of the item is difficult to ascertain or speculative." However, the majority of gift-acceptance policies end up being used to manage the potential contribution of items that the nonprofit is simply not well-equipped to handle and/or would distract the nonprofit from its primary mission. A common use for agift-acceptance policy is to explain to a donor that there are certain types of gifts, expecially in-kind contributions (outdated computers, for instance) that certain nonprofits simply can't easily use or dispose of safely.
  • Consider the audience: Will the policy help guide prospective donors who are considering a gift? Or is the policy intended primarily to provide guidance for staff and board members?  Some nonprofits adopt a policy for external use with donors, but also draft guidelines to help staff and board members put the policy into practice.
  • For maximum financial transparency, consider posting the policy on your nonprofit’s website which helps manage donors’ expectations before they approach your nonprofit with a non-standard gift.
  • If the policy will not be linked from the website, how will it be distributed so that individuals who are considering a gift can be informed about the policy?
  • Some policies specify that prior to accepting certain types of gifts, such as real estate, the nonprofit will conduct a review and/or consult with legal counsel.
  • Conflicting interests: The nonprofit doesn't want to be in a position of serving as both the recipient of a donation, and the tax-advisor for the donor with respect to the transaction! The policy can encourage donors to seek professional advice prior to making a gift, and explain that the nonprofit will not provide advice directly to the donor because that would pose a conflict of interest.
  • Consider the usefulness in certain situations of a “gift acceptance committee,” or task force, composed of individuals with appropriate expertise and experience to evaluate gifts and decide whether or not to accept them.
  • Nonprofits should always strive to treat donors with respect. Consider including a reference to the Donors' Bill of Rights in your nonprofit's gift acceptance policy.
  • If there are specific types of contributions that are or are not acceptable to the nonprofit, it is best to be transparent and name them in the policy.
  • As with all policies – who is accountable? Will the policy be evaluated from time to time, and who will conduct the review? A "resource devleopment" or "fundraising" committee of the board may be the best governance route for adopting, reviewing, and updating gift acceptance policies.
  • Read our blog post with pointers on "Saying 'thannk you' to donors."

Resources

For more information about fundraising, we encourage you to review the Council of Nonprofits’ fundraising resources.

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