Best Practices in Implementing Gift Acceptance Policies and Procedures

Tax Professionals' Resource
June 14, 2012 — 1,952 views  
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Nonprofit organizations often go through a lot of trouble to raise funds that finance their business expenditures. When a campaign supporter or organization offers a free donation, it can be tempting for a manager to accept the present without adhering to company regulations. A gift acceptance policy is important because it establishes legal presets that guarantee ethical practices, donor liability and item restrictions. The following are mandatory aspects of a sound compliance system.

Mission Statement

As with any official documentation that your nonprofit produces, you should keep your mission statement emblazoned on a footnote or header. This prevents a potential donor from misconstruing the purpose of your organization and possibly making an inappropriate donation. The first paragraph on a gift acceptance policy should be a clear, concise summary of your company's goals and aspirations, along with any other relevant information.


After explaining the purpose of the gift acceptance policy, you'll want to include some language on the financial and tax responsibilities of the donor. You need to explicitly write that donors must seek their own legal counsel regarding monetary and physical gifts, because it is illegal for your corporation to function in an advising role. Also, this frees you from any potential tax consequences in unexpected situations, as you will have trusted a donor to have his or her own financial affairs in order.

However, you should also outline your organization's internal legal policy on accepting gifts. This must include language on determining a conflict of interest, reviewing stock transactions and creating buyer-seller agreements, as well as covering all other pertinent matters. This helps both employees and donors understand how the company approaches accepting all types of gifts.


Finally, the most expansive section of the gift acceptance policy should be the classification of gifts. Items should be divided into several categories, and there should also be a separate section dedicated to restricted items.

For example, a common way to split up gifts is into three categories - cash, personal property and private equities/securities/assets. Cash is self-explanatory, and many companies establish a maximum amount of money that may be donated at a single time. Personal property refers to furniture, cars and other items that are tangible and exist in a physical capacity. Private assets are less concrete valuables like stock options, real estate holdings and equity transfers.

Tax Professionals' Resource