Gift Acceptance Policy: What Needs to be Included?

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July 30, 2014

Most tax-exempt, nonprofit organizations must solicit gifts to fulfill their charitable missions.  To protect the organization, board of directors should adopt formal policies and guidelines to govern the acceptance of such gifts – a gift acceptance policy (the “Policy”).

The Policy should discuss who is authorized to accept gifts on the organization’s behalf and describe what types of gifts may be accepted.  Types of gifts may include:  cash; tangible personal property; securities; real estate; remainder interests in property; oil, gas, and mineral interests; bargain sales; life insurance; charitable gift annuities; charitable remainder trusts; retirement plan beneficiary designations; or bequests. 

The Policy should provide specific criteria governing the acceptance of each gift form.  For example, before accepting gifts of real estate, the organization might want to require an initial environmental review of the property.

In addition to helping the organization’s staff and volunteers, the Policy will help prospective donors and their advisors with structuring gifts.

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One size does not fit all.  The Policy should consider carefully the organization’s mission.  For example, hunger relief organizations should include specific procedures for handling food donations.  Similarly, the Policy may specify that certain gifts will not be accepted.  For example, a conservation organization might not accept donations of oil and gas rights.

The Policy should ensure that donor information is kept confidential and is disclosed publicly only with the donor’s permission.

The Policy should assign responsibility for completing certain IRS filings and donor acknowledgement letters.  For example, the Chief Financial Officer might be responsible for filing IRS Form 8282, Donee Information Return, if the organization sells or disposes certain donated assets within three years of receiving them.

When appropriate (e.g., bargain sales, closely-held securities, real estate, etc.), the Policy should direct the organization to seek the advice of legal counsel.

Michael N. Fine

 

 

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