Fundraising Fundamentals, Section 10.6

Gift Acceptance Policies

When offered a donation, the immediate reaction of most organisations is to gratefully accept.

This might not always be the best decision.

What if the gift comes from a dubious source? What if the donor wants to use the gift to further his or her own agenda? The institution runs the risk of damaging its reputation,  or it might be accepting a gift that  costs much time and money to administer.

It is sensible to have a policy in place that defines what gifts are acceptable and what the institution’s obligations (if any) might be should it accept a gift. Gift acceptance policies make it easier for an institution to accept a gift with a clear conscience and just as easily reject an unsuitable gift. They reduce risk and should be one of the first things an institution develops as it sets the boundaries for the fundraising activity.

The Process of Developing a Gift Acceptance Policy

Developing a gift acceptance policy is a chance for an organisation to discuss how  to handle the practical issues that can be triggered by certain fundraising scenarios.

Working through various scenarios is a useful exercise for both fundraising and other senior staff and helps develop a fundraising culture that adopts a sensible, professional approach to gift acceptance.

The process is closely related to ethics, and it is often useful to have input from independent advisers who can bring an objective perspective.

Developing a gift acceptance policy can strengthen an institution’s internal gift administration procedures, but both policy and procedures benefit from regular reviews to ensure that they are compatible.

What Should a Gift Acceptance Policy Contain?

First,  a gift acceptance policy should specify who is responsible for the policy’s implementation and administration. This is normally handled by a committee of senior staff (both fundraisers and non-fundraisers) and independent representatives. It is also advisable for the committee to include representatives from the financial and legal sector.

A policy might also contain:

• A reminder of the institution’s purpose in raising funds – the mission statement,
• A statement of the purpose of the policy,
• The remit of the gift acceptance policy committee,
• A designation regarding at what point professional advice from lawyers or finance specialists should be sought (e.g.,  if a gift exceeds £1million or a donor wishes to donate a substantial asset),
• A definition of what constitutes a conflict of interest,
• A definition of  the institution’s response to proposed gift restrictions (e.g., how to respond if a donor says his gift can only benefit a certain type of student),
• An outline of the obligations of the institution in relation to the administration and stewardship of gifts,
• Specifics about  forms gifts are acceptable (e.g., Can you accept gifts from overseas? Can you accept tangible assets?),
• Information about who is responsible for the completion of a gift (e.g., who pays any legal or banking fees?),
• A reference to a donor recognition policy,
• Something on the transfer of liabilities (e.g., if a donor gives your institution a building with sitting tenants, who takes responsibility for the welfare of the tenants? If you are given a share in a racehorse, who is responsible for the horse’s welfare?),
• An outline of how and when the policy will be reviewed and amended and
• Information about  any right of appeal.

Without a gift acceptance policy in place, your institution may be forced to react quickly and without time to consider all the possible ramifications when it is offered a major gift. In such circumstances, errors in judgment can be made. It is far better to adopt a pre-emptive approach and establish a strong gift acceptance policy from the start. Your institution will appear more professional, both donor and recipient will have a better fundraising experience, and the risks to both parties will be considerably reduced.

Action Item

• Determine with the institution’s leader who is responsible for the policy’s implementation and administration of the gift acceptance policy, and create the policy with this committee early on.

You Might Also Want to Read:

Key questions you must be ready to answer
Policies and procedures
Cultivation of major gifts
Cultivation of corporations
Cultivation of government and lottery funding
Legacies/Planned Gifts/Bequests
Stewardship Activities
Gift accounting and reporting
Gift recognition policies

What Would You Do ... ?

A donor wishes to donate a valuable art collection to your institution.

• Have you considered the practical issues of accepting this gift?
• Where will you put the art?
• What about insurance, security and curatorship?

A former student wishes to leave a large bequest to your institution to support a scholarship programme for underprivileged children, but much of his wealth comes from investments in clothing factories that may have exploited child labour.

• Do you accept?