Although it is always hard for a nonprofit agency to turn down any gift from a donor, some gifts may be more trouble than they are worth. Having a clear gift acceptance policy can help you graciously and respectfully decline gifts under some circumstances and better manage donors’ expectations.
Common Reasons to Adopt a Gift Acceptance Policy
Your nonprofit organization should consider adopting a gift acceptance policy for various reasons, but some are common to almost all organizations. An effective gift acceptance policy can benefit your nonprofit by:
- Identifying the types of gifts or donors that may be adverse or run counter to the organization’s values as an explanation why the organization cannot accept them.
- Explaining why some gifts create legal obligations that the organization cannot realistically handle, such as:
- Real estate, which can raise property tax, insurance, and zoning issues, among other concerns
- Vehicles and boats, which can result in licensing and insurance issues
- Cryptocurrency, which your organization may not yet have a means of converting to usable assets
- Gifts that cause the organization to have to pay or incur fees, such as environmental audits or third-party fees associated with the transfer of the gift
- Discouraging gifts of in-kind contributions that are unusable and not easily disposed of, such as outdated computers or electronics or heavy furniture that will not fit your current office space
Other Considerations in Drafting a Gift Acceptance Policy
You can customize your gift acceptance policy to meet your organization’s needs. For instance, if you operate a larger nonprofit agency, you may want to draft a more expansive gift acceptance policy than you would if you operate a smaller agency.
Leaving Options Open to Accept Non-Standard Gifts
You may not want to rule out accepting a specific type of gift completely. If this is the case, your gift acceptance policy could include a statement that your agency must review the proposed gift with legal counsel before accepting it. Common gifts that might be subject to such a policy could include stock, real estate, oil, gas, and mineral interests, and gifts with unusual restrictions.
Handling Conflicting Interests
Your agency should never be in the position of both receiving a donation and advising the donor on the tax advantages of donating. As such, your gift acceptance policy likely should contain a provision advising prospective donors to seek independent professional advice before making a gift. While a statement that gifts to a nonprofit agency may be tax-deductible is likely not harmful in any way, giving any more specific tax advice beyond a blanket statement could represent a conflict of interests.
Making Decisions About and Approving Gifts
You may want to have a protocol for evaluating gifts and determining whether to accept them. For example, you could have a named task force to perform this function or a designated committee or employee to consider these prospective gifts. Whatever review mechanism you choose, you should make the process as transparent as possible.
Reviewing and Updating the Gift Acceptance Policy
Nonprofit agencies should review and update their policies from time to time, and a gift acceptance policy should be no exception. Either the gift acceptance policy itself or accompanying policies should explain how often the policy is reviewed and who is responsible for reviewing it.
Call Church Law Center Today Don’t hesitate to contact us when you need assistance with legal issues related to your church, religious organization, or nonprofit organization. You can reach our offices by calling (949) 892-1221 or contacting us online here to learn more about how we can help. We offer a wealth of experience handling the unique legal issues that nonprofit and religious organizations routinely face.