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Fundraising Fundamentals, Section 10.4

HEFCE

Gift Agreements

A gift agreement is a formal document between a donor and a gift recipient. The agreement sets out what the gift is, how it will be given, used and acknowledged and how it might be amended in the future.

Why Do You Need a Gift Agreement?

Gift agreements ensure that both a donor and a recipient understand the nature and purpose of a specific gift. The agreement acts as a reference point for the administration of a gift, especially in the event of any dispute. It ensures that the expectations of both the donor and recipient can be met over time and can continue to be met should the original context of the gift change.

When Should You Use a Gift Agreement?

Gift agreements are not commonly used for the majority of gifts. They are typically for large gifts that are given for specific purposes and for gifts of any size that are accompanied by very specific or complex requests from the donor as to how they should be used. The definition of what constitutes a large gift will depend on the scale of fundraising at your institution.

What Is the Legal Status of a Gift Agreement?

Any gift agreement should be written with the understanding that the donation is a philanthropic gift, given over to the control of the recipient institution, although the donor can expect the institution to honour his or her wishes. It should not be confused with the legal contracts that accompany sponsorship agreements.

The legal status of a gift agreement may vary from country to country. You should consult a legal professional when drafting a gift agreement template.

What Should a Gift Agreement Contain?
  • Names of the parties to the agreement (the donor and the recipient)
  • Start date
  • End date (where applicable)
  • Gift amount (or description when a gift is a tangible asset, such as artwork or equipment)
  • Gift schedule and mode of giving (e.g., in three instalments over three years by bank transfer)
  • The intended purpose of the gift as specified by the donor
  • How the recipient intends to fulfill this purpose
  • How the recipient will acknowledge the gift
  • Any monitoring, reporting and stewardship activities the recipient intends to undertake
  • Any specific undertaking the recipient has agreed to (e.g., insuring the gift, investing the gift, etc.)
  • An ‘amendment clause’ stating how the purpose of the gift might be changed, should unforeseen future circumstances arise
  • A reciprocal clause detailing what action might be taken to protect the reputation of either party, should the reputation of the donor or recipient be questioned at a future date
  • A place for both parties to sign and date the agreement
Approach with Sensitivity

When presenting a gift agreement, approach the subject with sensitivity. Donors may be offended if they receive a document without context and misinterpret it as a contract to ensure that they will actually make their donation. Highlight to donors that a gift agreement is simply to ensure that the donor’s wishes are properly recorded so that they may be fulfilled to the satisfaction of both parties.


Action Items
  • Create a template gift agreement, consulting with a legal professional.
  • Create a policy that specifies when a gift agreement will be used by the development team.

You Might Also Want to Read:

Cultivation of major gifts
Stewardship activities
Gift acceptance policies
Gift recognition policies


Gift Agreements: For Future Reference

Without a gift agreement, how would you know what to do with Mr and Mrs Pilkington’s longstanding History Scholarship Fund if your institution were to decide to close the history department and the original fundraiser who solicited the Pilkingtons’ gift had moved away?

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CASE maintains a collection of gift agreement samples, including various financial and in-kind gifts.