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Define Which Charitable Gifts Your Nonprofit Will Accept
Alyce Lee Stansbury, CFRE, Notes on Nonprofits
Does your nonprofit have a gift acceptance policy? If not, now may be an ideal time to create one or revisit an existing policy. Having a written policy is a considered a best practice for several reasons:
(1) it is a helpful tool for board and staff who solicit, accept, and field questions about donations;
(2) it educates nonprofit leaders and donors about important issues related to the acceptance, valuing, and recognition of charitable gifts; and
(3) set expectations for donors.
Every fundraising program should have some form of a gift acceptance policy. This is it especially critical before launching a capital campaign or other major fundraising effort, and as part of establishing an endowment fund.
Considerations for Policy
A gift acceptance policy should be a carefully thought-out document but does not have to be long or complicated. Here are a few things that should be included.
Acknowledge the role of philanthropy and importance of seeking and receiving charitable gifts to fund the mission and services.
State the acceptance of any charitable gift does not give donors control or decision-making authority over the organization. The authority to accept or decline all charitable gifts rests solely with the board of directors.
Encourage donors to seek their own legal or tax counsel before making a charitable gift.
In accordance with the Association of Fundraising Professionals Code of Ethics and Standards of Professional Practice, state that no member of the fundraising staff, including the Executive Director, is compensated based on a percentage of funds raised or on a contingency basis.
Indicate who serves as members of the gift acceptance committee. Some nonprofits designate the Executive Committee or Finance Committee to serve this purpose. Other suggestions include the Board Chair, Chair of the Development Committee, Treasurer, CEO, Chief Financial Officer, and Chief Development Director.
Cash and Cryptocurrency
List the types of gifts the organization accepts at the discretion of the Board of Directors.
This may include cash, publicly traded securities, life insurance, beneficiary designations, retirement plan beneficiary designations, and tangible items. Larger nonprofits, with the capacity to accept more complex gifts, may include charitable remainder or lead interests in trust, annuities, closely held securities, real property, highly appreciated valuable collectibles such as art and jewelry, cryptocurrency, and other digital assets.
Cryptocurrency is the newest type of gift being included in gift acceptance policies. Cryptocurrency is defined by the Internal Revenue Service as property and, as a result, is subject to the same rules as non-cash charitable gifts.
Nonprofits should conduct due diligence before accepting these types of gifts and indicate in the policy their intention to liquidate these gifts upon receipt.
Ask your organization’s CPA to review the policy for compliance with IRS requirements regarding acceptance and acknowledgement of charitable gifts.
Additional resources for writing a gift acceptance policy are available from BoardSource, Council on Foundations, Bloomerang, and Candid. If your nonprofit belongs to a state or national organization, they may be able to provide a template that can be customized for your organization.
Notes on Nonprofits is a column in the Tallahassee Democrat produced by Alyce Lee Stansbury, CFRE, President of Stansbury Consulting, and includes resources, responses to reader questions, guest columns, and timeless topics. This column first appeared on Sunday, May 23, 2022. Please send your comments and questions.