In the current economy, many not-for-profit organizations are looking for new and different ways to engage donors and solicit contributions. Some people believe that anything is better than nothing when it comes to gifts, but that is not always true. Not all gifts should be accepted, and saying no is okay. Navigating what an organization should accept can be significantly easier if the development team, the board of directors and management have a gift acceptance policy in place.
Related Read: Wrapping Up a Gift Acceptance Policy
Benefits of a Gift Acceptance Policy
A formal written gift acceptance policy identifies what types of gifts the organization is ready and able to accept without creating an unintended administrative burden. For example, cash, marketable securities or specific goods that the organization can readily use in fulfilling its mission are commonly accepted gifts. However, what may be a good gift for Organization A might not be a good gift for Organization B. For example, the donation of a farm. Some organizations may be able to use it or sell it, while others would have no ability or desire to own and manage real estate. Similarly, an animal shelter may welcome unopened pet food or toys, but a school would not have any use for those types of items.
It is best practice for organizations to have a gift acceptance policy in place because it can prevent frustrations and the potential alienation of donors by clearly stating what an organization is able to accept. It also prevents organizations from accepting a gift that could be problematic because they do not want to or feel like they are unable to refuse.
The policy does not need to be long or complicated. It should include what gifts an organization is prepared to receive, as well as the process that will be used for any gifts that are considered nonstandard for the organization. Some examples of nonstandard gifts include land, vehicles, art and nontraditional investments. While some organizations may choose to, organizations are not required to accept a nonstandard contribution, and many smaller ones will not. If your organization is open to receiving nonstandard gifts, make sure to consult with your legal counsel to understand any legal obligations that may transfer with the gift.
There are also tax considerations to keep in mind. Organizations that receive more than $25,000 of aggregate noncash contributions during the year are required to fill out Form 990 Schedule M – Noncash Contributions. Question 31 asks, “Does the organization have a gift acceptance policy that requires the review of any nonstandard contributions?” The IRS defines a non-standard contribution as a contribution of an item that is not reasonably expected to be used to satisfy or further the organization’s exempt purposes (aside from the need of such organization for income or funds) and for which (a) there is no ready market to which the organization can go to liquidate the contribution and convert it to cash, and (b) the value of the item is highly speculative or difficult to ascertain.
Nonstandard contributions may also include cryptocurrency, something that all organizations should decide if they wish to accept or not. Special rules and requirements apply for organizations that choose to accept donations of cryptocurrency.
Advertising the Policy
Once a gift acceptance policy is in place, it is very important that those tasked with soliciting contributions are aware of what would be a good gift. To spread the word, organization may post their policy on their website, include in the board of directors onboarding documents, and of course include in the accounting policies and procedures manual.
Organizations should review their policy regularly to ensure that it is still appropriate. As staffing changes, organizations may be more or less able to handle non-standard contributions. Having a clear and concise policy that is used by the development team, board of directors and management is an important tool to maintain and grow a happy donor base.
Related Read: Should I Accept This Contribution?
If you have any questions, contact Alison Fetzer at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Not-For-Profit Group.