A Gift Acceptance Policy is an important document for following best practices in nonprofit fundraising. This policy determines in advance which type of donations or gifts the organization will or will not accept. It might seem odd to think of turning down any type of donation when nonprofits are usually so strapped for funds, but that’s one of the primary benefits of developing a Gift Acceptance Policy: to anticipate and think through unusual situations related to donations or gifts to the nonprofit before they occur.
This type of policy is normally used to determine how to handle “Non-Standard Contributions” to the nonprofit. Having a policy for gift acceptance to review non-standard contributions is not legally required, but it is considered a best practice for nonprofit governance. The IRS defines these types of gifts as the “contribution of an item that is not reasonably expected to be used to satisfy or further the organization’s exempt purpose and for which (a) there is no ready market to liquidate the donation to convert it to cash, and (b) the value of the item is difficult to ascertain or speculative.” https://www.councilofnonprofits.org/tools-resources/gift-acceptance-policies
Therefore, if the potential contribution doesn’t further the mission and values of the nonprofit, it could be difficult to deal with and might cause a distraction from your normal activities. For example, a nonprofit that provides some form of housing might be offered a parcel of land with a home. While this might seem to further the mission of the organization, it could end up being a distraction if the property needs major repairs, has tax issues, or raises any other concerns that would make it hard (or impossible) to sell or use for the intended mission of the nonprofit. Trying to deal with the gift might take a long time and require countless staff hours, impacting your already limited budget.
Of course, there could be non-standard gifts that the nonprofit can handle and turn into an asset for the organization. The Gift Acceptance Policy allows you to determine where the offer falls, and can help head off any awkwardness with a donor if you know right away that the gift does not meet the nonprofit’s donation criteria. Having a clear-cut guide for gift eligibility also lessens any chance for misunderstanding or miscommunication with potential donors.
While you might not face the issue of a non-standard contribution, it is an advantage for a nonprofit to have this policy as it clarifies what the organization will or will not accept, and why. It lets the Board of Directors think through donation issues before they arise in order to better address them. The first consideration should always be that any gift accepted by the nonprofit must support and further the mission and values of the nonprofit. It also helps to define the type of in-kind contributions that the nonprofit can’t handle or dispose of easily or safely.
Your Gift Acceptance Policy doesn’t have to be elaborate. It can be as simple as a statement from the Board of Directors saying the organization “reserves the right to turn down any gift that is not in keeping with its mission or that it feels it cannot properly steward.” Alternatively, the policy can be more detailed and extensive depending on how the nonprofit is structured. https://www.grassrootsfundraising.org/2017/07/why-do-we-need-a-gift-acceptance-policy/
Fortunately, several sample policies exist from reputable sources to use as a pattern, such as this one from the National Council of Nonprofits. (https://www.councilofnonprofits.org/sites/default/files/documents/SAMPLE%20Gift%20Acceptance%20Policies.pdf).
A Gift Acceptance Policy must be disclosed on IRS Form 990 by completing Schedule M, as well as reporting any non-cash contributions/in-kind gifts. (https://www.irs.gov/pub/irs-pdf/f990sm.pdf)
Upholding a Gift Acceptance Policy is a best practice for nonprofits. You can learn much more about these policies and get guidance to develop your own from the references in the article and these additional resources:
Understanding and Drafting Nonprofit Gift Acceptance Policies
Gift Acceptance Policy Template https://bloomerang.co/resources/templates/gift-acceptance-policy-template/