Gifts and donations are vitally important to nonprofit organizations. However, not all donations are created equal, especially non-cash gifts and in-kind donations. In some circumstances, these types of donations can cause more problems than they’re worth.
This is why nonprofits should establish a formal gift acceptance policy. In fact, Schedule M of Form 990 specifically asks, “Does the Organization have a gift acceptance policy that requires the review of any non-standard contributions?” These are any donations that would not directly be expected to satisfy the nonprofit organization’s core mission, such as stock in a closely held business or rare and unusual items.
For example, suppose a donor wanted to give your organization a piece of real estate. But after accepting the gift, you discover that there’s a leaky underground storage tank on the property that has contaminated a nearby stream. The cost of environmental cleanup and future inspections could be hundreds of thousands of dollars.
Or suppose a donor wanted to give perishable food items to a nonprofit that assists domestic violence victims. However, the organization doesn’t have the proper storage facilities for the food or appliances for preparation. The nonprofit might be better off advising the donor to give the food to a local food bank instead.
A gift acceptance policy should include the following:
- A statement that the nonprofit will only solicit and accept donations that are in line with its mission
- A statement that the nonprofit must review any in-kind donations of real and personal property prior to acceptance.
- Which governing body will review the potential gift (e.g., the board of directors or executive committee)
A formal, written gift acceptance policy will make it easier to decline gifts that don’t satisfy your core mission without leading to awkward conversations with donors and possibly offending them.
Contact our Nonprofit Group if you have any questions about drafting a formal gift acceptance policy.