By Kent C. Weimer, Chartered Advisor in Philanthropy®, Gift Planning Specialist on behalf of Fablanthropy
Imagine getting a phone call that starts out with a well-meaning donor saying, “I have a deal for you!”
- Perhaps they want to donate their time share or a cemetery plot.
- Maybe they want to give you the apartment building they own and to make it easy they have a buyer ready to take it off your hands and they have even negotiated the sale price. Your organization will receive some easy cash, and everyone wins – right?
- What about that volunteer who wants to give you some bitcoin, or the grateful client that wants to donate that piece of vacant land right behind the chemical plant?
What do you say to the donor, to your boss, to your board? How do you proceed? A gift acceptance policy (GAP) will give you a roadmap to maneuver the sometimes-tricky path of unusual and noncash gifts.
All gifts are not equal in their financial value to your organization. They aren’t even equal in value and impact between one nonprofit and another. With a GAP that is customized for your organization, it will spell out your position on the types of gifts you will accept, who has the authority to accept which gifts, and how you will accept them. It also takes personalities out of the equation. It removes staff from having to make hard decisions. It’s board policy, it’s not personal. It’s a best practice that every nonprofit – no matter the size of the organization – should implement.
Your GAP should clearly define the role of staff in accepting gifts and create a gift acceptance committee that has authority to act on certain types of gifts. The policy should also give clear guidance on how and when the committee should make a recommendation to your board to make the ultimate decision in accepting a gift. When creating a GAP or reviewing an existing policy, keep these points in mind:
- Make it fit: A summer camp may accept a donation of a sailboat. The local art museum may decline the same gift. The heart of a gift acceptance policy is what kinds of donations your organization will accept and who can accept them. It should be personalized for your organization based on your mission, vision, and values.
- Consider risk: Your customized GAP should consider risk management, fiduciary responsibility, and effective use of staff resources. These include, and are not limited to:
- Will your organization act as trustee for a trust?
- Will you serve as the executor of an estate?
- Will you accept a gift from a donor that may diminish the organization’s reputation?
- Is it worth it to accept a non-cash gift that will take an inordinate amount of staff time to sell? Is there an alternative?
- Educate through guidelines: Gift acceptance policies serve to educate your board, staff, donors, and advisors, making them more aware of the organization’s development program. Though fundraising professionals should never offer legal or tax advice, you can inform donors about issues that may protect their ability to receive a tax deduction for a gift or be beneficial to administration of their estate, and always direct them to consult with their own tax advisor or attorney.
A well-thought out and periodically reviewed and updated Gift Acceptance Policy:
- Is reviewed and approved by legal counsel and the board of directors;
- Defines parameters and who has the authority to act to accept gifts at various levels, and the process for gifts outside those parameters;
- Defines the fiduciary responsibilities the organization will accept;
- Provides for a high standard of accountability and financial disclosure;
- Defines the ethical framework for soliciting, accepting, and managing gifts;
- Identifies the types of gifts the nonprofit will accept;
- Demonstrates an understanding of IRS regulations and an intent for compliance;
- Outlines the protections granted to donors;
- Demonstrates a professional approach to accepting gifts; and
- Removes personalities from transactions.
All fundraisers should request a copy of their gift acceptance policy and refer to it as needed when working with prospects and donors. Organizational leadership should review the GAP every one to two years. Need a policy drafted or need assistance with your review? Let us know how we can serve as your sidekick so you can save the day when it comes to complex gifts for your organization.