Have You: Created a Gift Acceptance Policy?
I’ve noticed that organizations are starting to get the hang of Conflict of Interest and Whistleblower policies. But the Gift Acceptance policy is one that still seems to get overlooked; even though there are a variety of reasons for having one in place. For starters, they protect against jeopardizing a tax-exempt status, lower the risk of taking on disproportionate liability and provide a development road-map for board members and committees.
Arguably, a Gift Acceptance Policy (gonna call it a “GAP” going forward) is just as important, if not more important, than other policies asked about on the 990. Sure, having a policy address whistle-blower’s is definitely recommended. But gifts and donations are an organization’s life-blood. Why not have a document systemizing the acceptance, maintenance and capitalization of those gifts?
What follows is a brief discussion on some of the other benefits and suggested provisions/ideas/concepts that might be included.
Other Benefits and Reasons of Having One
In addition to the benefits above, putting a GAP in place is also great because:
- Charity rating organizations like CharityNavigator and BBB Wise Giving Alliance factor in fundraising when rating organizations. In fact, CharityNavigator looks at things like fundraising efficiency and administrative expenses; all things that are impacted by how gifts are accepted and handled.
- They create terms and conditions of the the gift; essentially a contract or understanding between the parties. This allows organizations to manage donor expectations, clarify what gifts are and aren’t appropriate, allow for a change in use where a mission or program changes and provide a vehicle to opt out of any default obligations that might be required under the law.
- They provide an objective way to exercise more discretion and have more flexibility regarding what gifts are accepted or rejected without offending potential donors or ruining relationships.
Things to Think About; the Logistics
Before putting pen to paper, the Board, ED, grants officer, development etc. should get together and think. Think about what the organization has accepted in the past and how those gifts were handled.
The industry and mission of an organization should also be taken into serious consideration. There may be gifts that are acceptable from a legal perspective, but as we know, development is all about relationships. If there’s a gift that may cause conflict (or is even slightly questionable because of its origin, proposed use or restrictions) organizations will want to have a protocol in place to objectively review and gracefully decline if not appropriate.
Organization’s may also want to take the time to ensure that the full intent of the GAP is carried out by providing the policy some authority and amending the governing document (i.e. the certificate of formation in Texas) to address it.
Concepts/Ideas/Provisions to Address and Include in a GAP
- Restate the mission.
- Reiterate what the organization’s mission is.
- Who will be responsible for enforcing and updating the policy?
- What types of gifts will and won’t be accepted?
- For each type of gift accepted address specificities relating to that gift. For example, if the gift is real property you might address issues such as appraisal, the deed or environmental issues.
- If the organization wants the ability to reject gifts, this right should probably be reserved in the policy.
- What due diligence, paperwork or other acts or documentation must a donor perform or provide (if any) before a gift is considered by the organization?
- Will there be tiers of approval?
- There are certain gifts, like real estate or split interest gifts, that can be so complicated that having an approval process where the board, and possibly counsel, are brought in will be helpful.
- Restricted Gifts
- Address whether or not restricted gifts (those requiring that a donation be used for a specific person or purpose) will be accepted.
- If they will, how will restricted gifts be treated?
- For example, there should be an out that gives the organization the discretion to use the restricted gift for a different purpose where the restriction is illegal, against the organizations mission, etc.
- Allocation of costs related to gifts.
- If appraisals or audits need to be done before a gift is considered these costs should be allocated to the donor and set out in the policy.
- Discuss confidentiality and donor privacy
- What donor information will be kept secret and what does the organization have an obligation to disclose?
- What types of receipts or acknowledgements will the donor receive for giving, if any?
- When will the receipt be given, what will it state and will a record be kept by the organization?
- Some statement clarifying that the organization will not give legal advice or advise on gifts received and that donors should get their own counsel.
- Though passing this policy out may be good, I would encourage organizations to have some type of waiver or writing attached that donors must sign recognizing they’ve received and agree to the policy.
Some policies will also go into how the gifts are allocated, the standards used for valuing gifts and a provision requiring that the policy be reviewed and/or amended from time to time.
How a GAP reads, and what it contains, will differ markedly depending the size of an organization as well as its industry. Best efforts should be made to avoid succumbing to peer pressure when creating one. In other words, if modeling a policy off of one drafted by another organization, don’t feel pressure to include gifts that create a huge burden or are outside your resources. Drafting a policy might also be taken as an opportunity to get the Board more involved and knowledgable about the development side of an organization. Regardless, the key takeaway, as with any policy, is that the more tailored it is the more effective it will be.