At the AICPA Not-for-Profit Industry Conference I attended two weeks ago, one session’s topic was governance for Not-for-Profits. Throughout the year, we have discussed many of these topics and will continue to do so in the upcoming months. An article from the Journal of Accountancy lists the fifteen top governance concerns mentioned at the conference, with one of the more interesting topics being implementing a formal gift acceptance policy
A formal gift acceptance policy may be as simple as a policy that requires donated securities be converted to cash at the time of donation, such that the value retained is relatively the same as the value when received. However, the policy could (and probably should) go further than that. It is important to have a policy that could support a non-for-profit organization not accepting gifts that may not be readily convertible to cash, or that actually may require further expenditures by the not-for-profit organization.
Examples mentioned by some of the attendees were a cattle ranch and a timeshare that were donated to different not-for-profit organizations. In the case of a cattle ranch, it was actually a ranch that was functioning and had livestock to take care of, increasing the costs for the organization. For the timeshare that was donated, there were annual maintenance fees that needed to be paid and the timeshare itself could not be cancelled.
Another example could be that a not-for-profit organization receives a donated share of a limited partnership. This type of investment could bring questionable value to the organization, and further may be associated with various risks in the operation of the partnership bringing additional risk to the organization. These gifts and other similar gifts could be more problematic and costly for a not-for-profit organization to accept and own, rather than being able to easily turn them away based on the appropriate gift acceptance policy in place.
The gift acceptance policy should be provided to the board and staff of the organization, and may even be posted on the organization’s website. A policy allows the organization to politely refuse a gift that may not be able to be used productively and for the best interest of the organization. It also allows your staff to maintain consistency with the acceptance of gifts.
A policy can also be used to enhance donor relationships. The policy can be incorporated into major and planned giving programs such that gifts to your organization can be easily included in wills and other trust documents. This may provide your organization access to donors who may not have known these types of giving opportunities existed with your organization.
There are many tools on the internet and found through other resources that can guide you on establishing a gift acceptance policy.