Establishing a Gift Acceptance Policy

Orlea Miller
KC Topics: 
Fundraising & Development, Annual Campaign, School Policies and Procedures, Fundraising

How to Do It and Details to Consider

Day schools do not always anticipate the variety of ways donors may want to contribute.  It can be difficult to determine which giving options are most beneficial to the school, as well as to the donor, and which are not.  Some gifts may seem wonderful at first – such as the gift of the proceeds from a donor’s rental property.  Upon closer review, however, they may not be in the best financial interest of the school or the donor.  With some slight changes, many gifts can be transformed from losers into winners for the donor and the recipient.

The following guide does not attempt to define an all-purpose gift acceptance policy because the needs of schools vary – a complicated gift that may be an asset for one institution may prove unwieldy and a drain on another.  This document does outline how to establish a gift acceptance policy and what should be considered when defining a policy.

Who Should Be Involved and Why

Board members and key staff should work together to establish the gift acceptance policy.  If volunteers who are not board members have financial expertise that could be helpful, they should also be included.  Ultimately, it is the board’s responsibility to approve a policy and amend any changes.

When to Establish a Policy

A policy should be established before soliciting contributions, particularly major gifts, for several reasons.  It is important that each donor is treated with equal respect and given the same opportunities to contribute.  Without a gift acceptance policy, it is likely that the information donors receive about ways of giving will vary depending on who solicits them.  Having a policy in place will help volunteers respond to offers of out of the ordinary gifts in a manner that is beneficial to the school. The board should revisit the gift acceptance annually.  Policy changes may be required to better meet the needs of a dynamic program.

What Items Do We Need to Cover in our Policy?

Pledge Period

What is the optimal length of time for maximizing gift size while minimizing the chances of donors not paying their pledges?  When asked by a donor for a longer pledge period, how will the school respond?

Securities

How will they be accepted by the school? Are there any stocks that the organization will not accept because of political or moral conflicts with its mission?  Will stocks be sold immediately upon receipt, or held in hopes of future gains?  What kind of documentation will donors receive for their gift of securities?

Real and Personal Property

Will the school accept gifts of personal property or real estate?  What process will be required to determine if the gift is in the best financial interest of the school (appraisals, liabilities, or hidden costs in accepting or selling the property)?  Who will decide if the gift should be pursued?  What is the accepted time frame for completing a property gift transaction?

In-kind Gifts

Will the school accept in-kind gifts? What process will be required to determine if the gift is in the best financial interest of the school (appraisals, liabilities, or hidden costs in accepting or selling the property)?  Who will decide if the gift should be pursued?

Planned Gifts

Is the school prepared to accept deferred gifts, such as bequests or other planned giving vehicles?  Planned gifts often yield considerable tax benefits to the donor as well as possible income during the donor’s lifetime.  The school ultimately benefits from the gift principal, which is generally a much larger amount than a donor can afford to give outright.  What kinds of planned gifts will the school accept? How will volunteers and staff be trained to recognize planned giving opportunities?  How will donors and potential donors be informed of planned giving opportunities?  Who will manage planned gifts?  How will planned gifts be credited during major campaigns?

Named Gifts and Donor Recognition

What opportunities exist to offer donors special recognition for their major gifts?  At what gift levels will gift recognition opportunities be available?  What types of recognition will be provided? Are there recognition opportunities available at each giving level?  Will recognition opportunities provide an incentive for donors to increase their giving?

Thank You Procedure

Details are crucial!  Define the exact process, who is responsible, acceptable turn-around time, and proper signatories.  Determine at what gift levels personal thanks will be crafted versus a more generic thanks.  Will more than one thank you be sent?  What about follow-up reports on the organization’s progress?  How will donors be reminded to pay their pledges?  Is the organization providing the documentation required by the IRS?

Reporting

What kinds of information does the board need on fundraising progress? Who will be responsible for updating the board?  How often should updates be provided?  Who will be privy to “confidential” donor information (such as anonymous gifts)?

Other Factors to Consider

Management of Gifts

What kinds of professional help will the school need to properly accept and process gifts (accountant, stock broker, real estate agent, tax attorney)?  Is this expertise available from its current staff, board, or other volunteers?  Is it cost-efficient to hire professional help as needed?

Oversight

Who is ultimately responsible for determining whether or not a gift will be accepted? What is the role of staff in oversight decisions? What is the role of board?

Risk Factors

Will the school’s reputation suffer if it accepts a gift from a source whose values conflict with its mission?  If the gift is a hard-to-sell property, are the staff time and other costs worth the potential value, or is it a “white elephant”?

Donor Bill of Rights

How will donors be kept informed about their gifts, and how will they be ensured that their gifts are used for their intended purposes? What information will donors be entitled to about their own records? What financial information about the school will be accessible to donors? How will they be treated by staff and board members?

Prizmah acknowledges Collins Group: a division of Campbell & Company in the development of the material above.