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Thursday, March 8, 2012

Charitable Giving: Knowing when to say “No Thanks”

Posted by Armanino Nonprofit Team

As the economy improves, many nonprofits are already experiencing boosts in charitable giving. As such, organizations are looking at ways to strengthen fundraising efforts. They are planning for future projects which will be made possible because of gifts from generous benefactors. Now is the time for organizations to review their gift acceptance policy.

In some instances, it may be in the best interest of the organization to refuse a donation. Some types of contributions such as donations of certain types of real estate, closely held investments, charitable annuities and others may require the recipient organization to incur reporting, valuation, legal and other hidden costs. These costs will burden organizations that don’t have the experience and the resources to handle these requirements. In the end, the donation may end up costing the organization even more than its original value.

A gift acceptance policy guides a nonprofit in the types of gifts it will accept and protects it from gifts that are not in the best interest of the organization and the accomplishment of its mission.

A well thought out gift acceptance policy should incorporate the following aspects:

· Mission of the organization

· Purpose of the gift acceptance policy

· Guidelines on when to use outside legal counsel

· Types of gift vehicles that require approval from management, board or gift acceptance committee prior to acceptance

· Acceptable restrictions on gifts

· Donor conflicts of interest (circumstances in which the donor should seek professional advice prior to making a gift)

· Reporting requirements—enumerate what must be done, such as providing written acknowledgement of gifts and filing specific IRS forms for certain types of gifts

· A statement regarding the responsible party for legal and professional fees to complete the gift

Organizations should consider forming a gift acceptance committee. The committee should be made up of individuals with the appropriate expertise and experience to evaluate gifts and decide whether or not to accept them. The committee should also be responsible for reviewing the gift acceptance policy regularly and revising as needed.

A sound gift acceptance policy creates a guide for the organizations development department to follow and ensures that accepted gifts are consistent with its mission and values, avoids potential conflicts of interest, and are strategically sound and practical.

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