Gifts to non-profits come in many forms. Cash, securities, cryptocurrency, or tangible items such as art all require evaluation. While turning down a gift from a donor may seem counterintuitive, in some cases it is the best decision. Some gifts may come with excessive restrictions, reputational consequences, or additional expenses. It is important to be able to judge whether a gift is truly just that, or if a “no, thank you” would better serve your organization. A Gift Acceptance Policy can help guide this decision.
A Gift Acceptance Policy defines characteristics and limitations of gifts and provides the framework to manage risk and decline donations that are not beneficial without damaging donor relations.
Creating a separate committee dedicated to reviewing donations is a best practice. This may be a sub-committee of the Finance Committee, or an entirely new group that can assess gifts to ensure they are in line with your organization’s mission. Additionally, many organizations choose to make their Gift Acceptance Policy available on their website. Having an accessible policy will make the gifting process easier for both you and your donors.
Almost all gifts come with due diligence and reporting requirements. For donors to receive a tax deduction for a gift, they must have written documentation from the charitable organization. Your policy should indicate what person or department is responsible for acknowledging gifts and provide a timeline within which donors can expect to receive such acknowledgement.
Cash is the easiest form of gift to accept and can immediately be put towards furthering your mission. Typically, gifts of cash are not subject to extensive review unless there are conditions that come with the gift that are inconsistent with your mission.
Most gift acceptance policies state that gifts of stock, bonds, mutual funds, or other highly liquid, marketable securities, will be liquidated upon receipt unless otherwise instructed by the appropriate committee.
Gifts of real estate can be liquidated to generate cash or can be held. With real estate, your organization will be tasked with further considerations such as property upkeep and filing requirements. Your Gift Acceptance Policy should clarify which expenses your organization is willing to cover and which are the responsibility of the donor
Art and Other Tangibles
Art and other tangible items such as vehicles or coin collections can be retained or liquidated. Consider whether you have the capacity to oversee these types of gifts, which must be appraised, stored, and maintained, in some cases.
Cryptocurrency (crypto) is becoming an increasingly common form of donation. To accept this form of gift, you can either establish the infrastructure to receive, hold, and sell the assets, use a third-party payment processor, or use a Donor Advised Fund. Just as with gifts of securities, many organizations choose to liquidate the crypto upon receipt.
Planned Giving can include bequests, trusts, and beneficiary designations. If your organization offers Charitable Gift Annuities (CGAs), consider including the requirements and details in the Gift Acceptance Policy.
Other gifts such as Life Insurance Policies can cause your organization to incur future expense. The Gift Acceptance Policy may note stipulations such as requiring that the organization must be named irrevocable owner as well as beneficiary, and that the designation/gift will not be accepted unless future premiums owed are paid by the donor.
Regardless of the type of gift, there may be strings attached. Ultimately, your organization must be willing to accept the steps, conditions, and purposes that come attached to any gift, for any amount of time. Creating limitations as to what level of restrictions on gifts will be considered helps to provide a framework supporting both the current and future operations of your organization.
Nonprofits risk reputational damage if they accept gifts from individuals, organizations, or foundations with objectionable history or practices. Consider how your organization will conduct such background checks, and whether the process should become more expansive as the size of gift increases.
For acceptance of gifts that come with restrictions or specific uses, or are above a pre-determined amount, your organization may choose to use a Gift Agreement, which provides a further layer of protection by documenting the terms, donor intent, and related expenses of a gift.
It is important to make sure gifts are evaluated in a timely manner with decisions quickly communicated to donors to maintain relationships. Every gift, regardless if it’s accepted, should be a catalyst for a thank you. By demonstrating your good stewardship, well-developed policy, and responsiveness, you may turn an initial donation into a fruitful, long-term relationship with appreciative supporters.