If this was posed to your organization today, no doubt you would respond with a rousing, “Of course!” As a not-for-profit, especially in today’s challenging economic times, this may seem like a silly question. Not so fast, however. There are some instances when it may not make the most sense to accept that contribution.
When a Gift Goes Bad
With a contribution, the donor may place a requirement, or restriction, on the use of the funds. By accepting the contribution, an organization is also promising to use the funds in the manner that the donor has requested. Here are a few questions you should ask yourself before saying the magic word “yes”:
Does this further my organization’s purpose?
If a donor promises money to help fund a program that you currently do not provide, it may make more sense to suggest to that donor to contribute to a program that your organization currently provides or, if not, to consider re-directing the donor to a more like-minded organization rather than pursue an entirely new area for your own not for profit.
Are the restrictions reasonable?
In some cases, a donor may put so many restrictions on a contribution that a not-for-profit cannot possibly fulfill them all. Rather than dealing with the time and frustration that comes with this, it may be better to say “no thank you” and focus your talents and energy elsewhere.
Can I afford to accept this?
As funny as it seems, there are times when a contribution may cost more to fulfill than the value of the contribution itself! For example, an organization receives a $100,000 grant to provide services to the underprivileged. However, in order to achieve this result, a new building that costs $500,000 will need to be built. If the not-for-profit is expecting to receive future funds for this purpose, it could make sense to pursue this grant. However, if the organization will not continue with this program after the initial grant, they will end up with greater expenses than the grant received. In this case, the not-for-profit would probably be better served to spend their current funds elsewhere.
What To Do?
In order to minimize confusion and help prevent an organization from accepting an unwanted contribution, we recommend creating a gift acceptance policy for all staff and board members to abide by and to promote to potential donors. This policy should address items such as:
- Who has the power to accept contributions?
- What types of contributions will be accepted?
- How will contributions be recorded and tracked internally?
- How will donors be acknowledged and kept apprised of the timely use of their contributions?
As with all organizational policies and procedures, we recommend organizations work with legal counsel in drafting language that makes the most sense for the organization and abides by local, state and federal law. If you have any questions regarding gift acceptance policies and contributions in general, please contact us for assistance.