Noncash Gifts? Mind Your Gift Acceptance Policy

Nonprofit organizations welcome gifts of cash. But what if a donor wants to give a noncash gift, such as real estate, appreciated stock, or a work of art? Some gifts may not be appropriate for your organization, while others may have hidden costs. Having a formal gift acceptance policy in place provides much-needed structure — for both your organization and potential donors.

Purpose of a Gift Acceptance Policy

A gift acceptance policy serves three primary functions. It defines the types of assets you will or will not accept; it sets guidelines for the circumstances under which gifts are accepted; and it defines how certain gifts will be handled.

For example, suppose you wish to accept vehicles as donations. Your gift acceptance policy should define what types of vehicles are considered acceptable and in what
condition, how the vehicle will be transferred and transported, what paperwork will be required by the donor, and how the value will be determined.

Another reason to have a gift acceptance policy is tax compliance. An exempt organization reporting more than $25,000 of aggregate noncash contributions on Form 990 — or that, during the year, received contributions of art, historical treasures, or qualified conservation contributions — must complete Schedule M (Noncash Contributions). Schedule M specifically asks whether the organization has a gift acceptance policy that requires “non-standard contributions” to be reviewed.  Remember, stock donations are noncash contributions.

What To Include

Gift acceptance policies vary based on the nature and resources of the organization. In general, however, a well-constructed gift acceptance policy will address the following:

  • Type and form of acceptable and unacceptable gifts
  • Procedures for accepting specific noncash gifts, such as vehicles or real estate
  • Circumstances when the organization should seek professional advice prior to receiving a gift
  • Description of criteria for acknowledgement and donor recognition and details of how such recognition is to be carried out
  • Reporting requirements and responsibilities

The policy should also identify the circumstances when appraisals are required and what is a “qualified appraisal” under the tax rules. You’ll also want to have the policy reviewed by legal counsel and establish a procedure for making future amendments. When completed, the policy should be posted to your website so that it is easily accessible to current and prospective donors.

Outlining the types of gifts you will accept lays the groundwork for decision-making and provides your leadership and development staff with guidance about the types of gifts they can solicit and the types they should avoid. A well-thought-out gift acceptance policy also provides donors and their professional advisors with the guidance they need for tax and other purposes.

 

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