Nonprofit Gift Acceptance Policies: Your FAQs Answered
Today, gifts given to nonprofits come in various forms. They could be cash, securities, real estate, timeshares, art, or perhaps something more unconventional, like cryptocurrency donations.
No matter what it is, your nonprofit should evaluate each one to determine if it’s acceptable or not. And while no one ever wants to turn down a gift, sometimes it’s the best course of action. If your nonprofit hasn’t set up a gift acceptance policy yet or your current policy needs updating, here are tips and answers to some frequently asked questions on how to do it right.
What is a nonprofit gift acceptance policy?
A nonprofit gift acceptance policy provides guidelines for the types of cash and non-cash gifts the organization is allowed to accept. It also defines how the nonprofit should administer acceptable gifts. Most importantly, it informs and educates the board, staff, and other stakeholders regarding problems that certain gifts could trigger.
Why is a gift acceptance policy a good idea for a nonprofit?
There are several reasons why your nonprofit should have an official gift policy in place. First, it provides guidance for those who must make thoughtful decisions on all types of gift scenarios. It also provides the means to gracefully refuse a gift without creating ill will or awkwardness with the gift-giver. In addition, it helps you to answer affirmatively on IRS Form 990, which asks whether your nonprofit has a gift acceptance policy, complete a Schedule M, and report any non-cash contributions/in-kind gifts.
How do I set up a gift acceptance policy for my nonprofit?
You can search for several sample gift acceptance policies online. This one from the Council on Nonprofits is a good starting point. The policy you create should reflect your organization’s mission, size, characteristics, and resources. When developing your policy, involve all key players and be sure to include the following seven elements:
- A definition of who has the authority to accept gifts on behalf of your nonprofit.
- Specifics as to what gifts are acceptable and unacceptable. (See below regarding personal gifts from donors.)
- An outline of how pledge payments should be handled.
- A gift agreement template that specifies what the gift is, how it’s delivered, how it’s to be acknowledged and utilized, as well as how the organization might modify it for future needs.
- A procedure for providing gift receipts.
- A method for obtaining appraisals on gifts. (Tip: The donor is responsible for appraisals on gifts valued over $5,000 that are not cash or securities.)
- An outline for handling donor privacy, including personal identity disclosures, anonymity requirements, and donor data security.
Can board members, fundraisers, or general staff accept personal gifts from donors?
Our accounting team encounters this question often. Your nonprofit’s gift acceptance policy should not allow board members, fundraisers, or staff to accept gifts of personal property, money, or anything else of considerable value. Token gifts, which are items of value only to the recipient and with no other appreciable economic value, might be acceptable. Examples include certificates, trophies, or some other customized gesture of appreciation. However, be careful about these, as the rules can get slightly gray.
How often should I update my nonprofit gift acceptance policy?
It’s a best practice to review and update your gift acceptance policy often — ideally, at least once a year and, at minimum, every two years.
If you accept donated tangible assets or pro bono services, there are updated gift-in-kind reporting rules to be aware of.
It’s also important to be familiar with nonprofit donor disclosure rules/regulations.
IRS Publication 1771 “Charitable Contributions — Substantiation and Disclosure Requirements” provides further information.
The bottom line: You shouldn’t let your gift acceptance policy be an afterthought, especially when some “gifts” come with heavy restrictions, extra expenses, or potential negative impacts on your organization’s reputation.
If you need help setting up or updating your gift acceptance policy, our expert nonprofit accounting team at Qbix can help. We can also prepare your Form 990, which includes your Schedule M (which asks about your gift acceptance policy). So don’t wait — schedule a free consultation call today and give yourself the gifts of relief and more time to dedicate to your mission.
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