Why You Need a Gift Acceptance PolicyTax Professionals' Resource
May 13, 2013 — 1,250 views
Many companies and organizations have a gift acceptance policy in place because they cannot always say “no” to every gift every time. But a dividing line needs to be drawn between when to accept and when to not accept a gift. When a gift acceptance policy is in place, it is critical to remember when to say “no”.
Gift Acceptance Policy Provides Discipline
A non-profit that is dependent on donations and contributions generally does not have a gift acceptance policy in place. But an effective gift acceptance policy can maintain some discipline in the organization. There are advantages of putting a gift acceptance policy in place. The greatest advantage is that the non-profit can expect to save time and money as well as prevent hassles. The organization will also remain safe as far as their reputation is concerned.
An effective gift acceptance policy must define what types of asset offered to them are acceptable and the types that are not acceptable. They must also identify the gift forms that they are open to receiving as well as the ones they are not open to receiving. The policy must further go on to define how the organization will administer the gift. Clarifications on these issues with clear policy guidelines will make the non-profit more disciplined.
Avoiding Practical Issues with Gifts
There might be practical issues with gifts if no thought is given to the policy on handling of gifts, if accepted, and when to say “yes” or “no” to gifts. The consideration must also be given to the costs involved with gifts. Here are some examples that will clarify these issues further.
A common form of gift is through real estates. But it brings with it a host of issues including environmental and maintenance cost issues. If someone donates a large boat to the non-profit, the enthusiasm of the organization may die soon when costs to the organization are calculated. The cost may include storage, transport, insurance, expenses, and maintenance. Similarly, if someone donates artwork to a non-profit it could turn out to be a liability rather than an asset, while the same donated to a museum could have been an asset. Artwork will need to be insured and sold, which will draw money and resources out of the organization.
A Flexible Approach Leads to Poor Decision-Making
The best policies are the ones that are clear and give exact directions. While flexibility and discretion within the policy leaves ambiguity, confusion, and lack of timely decisions, a clear policy saves time, effort, and money. A case by case approach to decision-making leads to inconsistent decisions.
A gift may be appealing and so the organization may prefer to accept the gift. But later on it might become evident that it was a bad decision. Additionally, the lack of an established policy sends confusing messages to the donors interested in gifting. Also, the donor that gave some gift may be disappointed on learning that their gift was ultimately rejected. The flexible approach may distract the potential donors by sending them contrasting signals. In addition, the organization will waste a lot of its resources and time making decisions on gifts.