Fundraising Fundamentals, Section 10.7

Gift Recognition Policies

How you thank a donor is very important, as it influences his whole giving experience. Your thanks need to be expressed in a way that is appropriate to the scale, frequency and impact of the gift(s) you receive.

Having a gift recognition policy in place will help you:

• Manage the expectations of your donors (e.g., someone who donates £1,000 cannot expect the same level of public recognition as someone who donates £100,000,000),
• Ensure that everyone is thanked and no one is forgotten,
• Embed gift recognition into stewardship and other aspects of the fundraising cycle to encourage further giving,
• Ensure that the cost of recognising a donation is not disproportionate to the value of the donation,
• Ensure that the recognition of a gift is prompt and delivered by the most appropriate method (e.g., a widow giving a gift in memory of her husband should not be thanked in the same way as a young alumnus donating to the annual fund),
• Ensure that recognising a gift(s) does not become an overwhelmingly time-consuming activity and
• Ensure that the right people are offering their thanks and recognition of a donation (e.g., a £100,000,000 donor should expect to be personally thanked by the institution’s leader).

What Should a Policy Look Like?

Gift recognition policies need to be developed to suit the culture and circumstances of your organisation.

They should start with the definition of a ‘gift’. Other questions  that need to be addressed before a policy can be written include these:

• Are all gifts assessed on their cash or cash equivalent values? That is, does a gift of a rare stamp collection merit the same recognition as a cash gift of £1,000?
• At what stage do you count a ‘gift’ for recognition purposes – when it is pledged or when it is money in the bank?

A policy should include an explanation of a basic level of recognition that all donors might expect. For example, your policy might state that a donor will be sent a formal receipt and acknowledgement of her  donation within seven working days.

Often, policies will differentiate between the recognition given to gifts of different values. The form of recognition is likely to vary in accordance to the appeal to which the donor is responding. Donors to the football stadium appeal will expect their donation to be related to football in some way; donors to the library appeal in a different way.

For the purposes of a generic policy, you might wish to set the gift levels and then state that each appeal will assign an appropriate recognition to that level of donation. For example, here is a comparison of how two very different appeals might approach donor recognition:

Exceptional Gifts

Your institution will probably want to negotiate appropriate levels of recognition with exceptional donors on an individual basis. Even so, it is helpful to have some policy guidelines to steer these negotiations.

The policy should define what is meant by an exceptional gift. This might be a gift over a certain value or a gift with the capacity to be transformational for the institution.

It is common in the circumstance of exceptional gifts for the issue of naming rights to arise. Any gift recognition policy should have a clause relating to naming rights. Many institutions will have a separate naming policy. This clause or policy should be developed in consultation with relevant stakeholders on campus, such as the marketing and estate development teams. Consideration should be given to issues such as:

• Duration of gift. Will it be in perpetuity or limited to a number of years?
• How the name will be displayed. This will preferably be in line with the corporate branding guidelines.
• Whether the name will be included in marketing materials or on stationery.
• Under what circumstances the institution reserves the right to remove the name, should it become a reputational risk for the institution at some point in the future.
• Whether the name can be transferred or discarded, should the entity or building it is attached to cease to exist.

Anonymity

Some donors prefer to remain anonymous, and your policy should set out how this can be achieved whilst still complying with financial and legal obligations surrounding gift reporting.

Avoidance of the Issues Relating to Sponsorship

When crafting a recognition policy it is important to ensure that donors receive no commercial benefit from the recognition you are promising, as this runs the risk of their donation being classed as sponsorship – a situation that can have implications for both the donor and the recipient.

Action Items

• Create gift recognition policies early on to determine basic levels of recognition, and then expand and revise these policies as you implement fundraising strategies and activities (campaigns, appeals, etc.).
• Engage the marketing and estate development teams in appropriate policies.

You Might Also Want to Read:

Cultivation of major gifts
Legacies/Planned Gifts/Bequests
Stewardship activities
Gift accounting and reporting
Gift acceptance policies