Accepting Donations: The Importance of a Gift Acceptance Policy
Donations from the public are vital in providing a nonprofit organization with ongoing support. However, that doesn’t mean a nonprofit can or should accept every gift that’s offered. In some instances, a gift is given with the best of intentions, but in the end, it becomes a costly burden for the organization.
An example would be a donation of property that may require regular maintenance and property taxes to be paid. There are also specific state and federal laws that organizations must abide by when it comes to donations – not only how they are solicited, but how they can be used. One of the best ways to manage donations and ensure compliance is with a gift acceptance policy.
What is a Gift Acceptance Policy?
A gift acceptance policy is a written document adopted by the board of directors to protect the interests of an organization while preserving relationships with donors. It also provides staff and volunteers with rules on how to handle unanticipated situations and unusual gifts.
For example, a defined gift acceptance policy can make it easier for staff or a volunteer to clearly state that due to policy guidelines, they are unable to accept certain donations. Wondering what a gift acceptance policy looks like? Visit the NRMC website for a sample policy.
Why an Organization Should Establish a Gift Acceptance Policy
According to the National Council of Nonprofits, there are five important reasons to establish a gift acceptance policy:
- It provides staff and volunteers with consistent rules regarding the types of gifts that the organization will and will not accept, including those that are not in accordance with the organization’s values.
- It outlines why gifts such as real estate and motor vehicles may not be acceptable, in that they may lead to legal and tax issues that the organization isn’t prepared to handle.
- It gives the organization the ability to answer “Yes” when completing IRS Form 990, which asks if the organization has an established gift acceptance policy.
- It lists certain gifts that the nonprofit isn’t prepared to receive, store, maintain, or dispose of, such as outdated electronics, live animals, or large items like pianos and motor vehicles.
- It’s a best practice for ensuring relationships with donors are maintained and for managing risks the organization may take on.
A gift acceptance policy can also help organizations better identify and avoid situations in which donors are more interested in tax write-offs than helping to support the nonprofit with a thoughtful donation.
Creating a gift acceptance policy can take some time, but it is a vital document that protects and supports your organization’s best interests and preserves long-term donor relationships. For information on best practices for nonprofits and risk management programs, and resources to ensure your organization continues to do the good work it was meant to do, contact the experts at Charity First. For over two decades, we’ve developed property and casualty programs exclusively for nonprofits and social services organizations.