Nonprofit Gift Acceptance Policy Made Easy
Your nonprofit needs a gift acceptance policy more than you know!
I know it sounds wild, but nonprofit organizations should NOT take every donation offered. Why? Because some donations can end up costing your organization money and becoming a major liability.
Most donations are simple. A donor writes a check or clicks a “donate now” button online. But sometimes a donor comes to you with a contribution that is complex, confusing, time-consuming, or even controversial.
That’s where a nonprofit gift acceptance policy comes in. A gift acceptance policy helps you be transparent with donors. It gives you the power to identify and decline gifts that could put your organization at risk. Ultimately, a gift acceptance policy also helps you achieve your fundraising goals by enabling you to focus on the gifts you want – not those you don’t.
To give you a headstart, this blog post breaks down the elements of a gift acceptance policy so you can create the right policy for your organization. Better yet, if you want to get started right away, you can download a sample policy from my free tools.
What Is a Gift Acceptance Policy?
A gift acceptance policy is a formal set of guidelines, usually approved by the board, that spells out how an organization hopes to receive gifts and grants and which gifts it hopes to avoid. Your policy should consider the format of gifts (for example, a vehicle or property donation), donor-driven conditions of gifts (such as a donor requesting that a program be named after them), risks created by donors themselves (such as accepting money from the Sackler family), and thresholds for certain types of gifts (for example, not creating an endowed fund with a $50k gift).
Exceptions to a gift policy are normally only made via a board vote and not left to the discretion of staff. The goal of a gift acceptance policy is to save time, reduce confusion and create transparency about how the organization conducts business. The policy also helps preserve the organization’s most valuable asset – its reputation.
What kind of gifts might an organization turn down?
Sometimes nonprofits get so excited about a gift, they overlook the complexity or potential controversy. But there are several types of gifts organizations may want to pause and reconsider accepting. For example:
Nonprofits may choose to reject gifts or sponsorship requests from industries that have experienced controversy like pharmaceutical companies, tobacco or vaping companies, and fossil fuel companies. Accepting these gifts normally requires public acknowledgment, which may harm the nonprofit’s reputation – and sometimes even make national headlines.
Nonprofits may choose to reject time-consuming gifts. I once had someone donate a working vehicle to our organization with the explicit intention that we use it for our local travel. Normally we would liquidate vehicles by selling them immediately. Honoring the donor’s intent by keeping the car meant paying for insurance and upkeep. We left that car sitting for three months, unable to drive it. Soon enough, the car began to experience maintenance issues which cost us even more.
Nonprofits may choose to reject gifts, like time-shares, that are hard to liquidate. Such assets sit on your balance sheet and suck up staff time trying to figure out how to sell them. Some community foundations and other nonprofits know how to liquidate more difficult assets, but for most, it is a major hassle.
Nonprofits may turn down cryptocurrency because of its volatility or because of how carbon-intensive it is to create. Simply accepting the gift may not sit right with your organization because of your stated values.
What Are the Elements of a Gift Acceptance Policy?
Gift acceptance policies can be simple. But the older, larger, or more complex your organization is, the more complex your policy may need to be. For example, universities, family-run organizations, or those working on polarizing issues may have more complex considerations for their policies. Below are some of the basic elements of a gift acceptance policy.
Grab my sample policy that I created for Kidpower International.
Purpose
Many gift acceptance policies begin with a short section describing the document's purpose. Your purpose may include creating consistency, protecting the organization’s reputation, and maintaining strong relationships with donors.
Disclaimers, communications, and gift acknowledgments
Some gift acceptance policies will explicitly state that donors should consult their own tax or legal professionals for advice about gifts or grants. The policy may also state that the nonprofit receiving the gift may reserve the right to consult counsel before accepting the gift. It may seem cumbersome, but some organizations will be cautious about their reputation or becoming too beholden to any one company or family. Organizations then inform donors that before accepting a gift (especially of a certain size), they will perform internal due diligence, which is in everyone’s interest.
The policy may also state the expectations donors should have about communications from the organization. For example, a policy could include what information donors will receive about tax deductibility and how non-cash gifts will be handled. If non-cash gifts will be liquidated into cash, an organization should not keep this a secret. This matters because donors may have an emotional attachment to art, a vehicle, jewelry, or property and they should donate knowing what the organization intends to do with their gift.
Types of gifts accepted and examples
Most gift acceptance policies will explicitly state what types and examples of gifts will be accepted. It doesn’t mean every gift, regardless of circumstance, will be accepted but it does communicate how the nonprofit is willing to do business. Listing examples of acceptable gifts is very helpful for donors considering gifts of stock and increasingly, cryptocurrency
For example, larger nonprofits or community foundations may have dedicated staff who specialize in in-kind donations of cars or even time-shares, because they are complicated. It is in these charities’ interests to publicize that they are available for these gifts.
Examples of gifts not accepted or those requiring board approval
You can include a specific list of gifts you will not accept. Some no-brainer gift rejection ideas may include gifts that undermine the organization’s mission or those that could directly or inadvertently damage the community’s trust or the organization's reputation. A gift acceptance policy can also serve some trust-building, public relations, and mission-supporting roles. A health-related nonprofit could issue a press release articulating that its gift acceptance policy has been amended to prohibit the acceptance of gifts from the tobacco industry. Same for a climate change organization declaring that it will accept no money from fossil fuel corporations.
Not only does this get press attention, but it deepens the organization’s value proposition and may signal to new donors that the organization is very principled. The policy then becomes a marketing tool.
If your organization needs more wiggle room around some types of gifts, you can make clear that some gifts may require board approval. This lets the donor know that their gift may require due diligence before being accepted and buys your staff and board the time to conduct that due diligence.
Gift acceptance committee and review
It is wise to create an ad-hoc committee or subcommittee of the board whose job it is to handle gifts that need review. For the vast majority of nonprofits, this committee may never meet, but the creation of it shows stakeholders you take your policy seriously. Your policy should also state how often you plan to review and update your gift acceptance policy, so your organization appears responsive and flexible.
Since organizations should be reviewing some documents annually already (articles of incorporation, bylaws, board agreements, budgets, whistleblowing policies, etc.), you may as well add your gift acceptance policy to the mix!
How to Write Your Gift Acceptance Policy Today
Nonprofit organizations spend a lot of energy building their reputation and fundraising. It makes sense to protect your reputation and your valuable time by clearly stating the kinds of gifts you are willing to receive and which ones are not ideal.
Creating a gift acceptance policy doesn’t need to be cumbersome. If you need some inspiration, on my free tools page you can download a sample policy that I created for Kidpower and which they have graciously offered to share with the world. Feel free to use it as a template for your organization!
