Nonprofit Resources


Gift Week: Gift Acceptance Policies

Situation GW5: Fishing Lessons, Inc. is a public charity under IRC section 501(c)(3) that trains homeless men in skills that will be useful in a career in the commercial fishing industry. Their CFO, Mack, calls us to ask about any potential issues with a gift of property that a donor corporation wants to make to the ministry. The property includes a 105-year-old brick building that was a fish processing plant until 1988 and 2.5 acres of riverfront land. Mack asks, “What should the board and management do in terms of due diligence on this?”

We tell them that the property — although seemingly perfect for their ministry — could have myriad issues (i.e. legal, environmental, title, encumbrances, budgetary, etc.).

Ultimately, the organization’s governing body should decide whether it will accept noncash donations (in-kind gifts) and formalize its decision in a policy. No board wants the headache of having accepted a piece of real estate that is environmentally contaminated. A gift acceptance policy should include:

  • The organization’s mission statement
  • The purpose of the policy guidelines
  • The type of assets accepted (or not accepted)
  • Any restrictions (e.g., contributions of real estate are not accepted in the last quarter of the year)
  • How donor conflicts of interest will be handled (i.e., independent counsel)
  • Allowable restrictions on gifts by donors


From Schedule M (Form 990) Instructions:

Line 31. Answer “Yes” if the organization has a gift acceptance policy that requires the review of any non-standard contributions. A non-standard contribution includes a contribution of an item that is not reasonably expected to be used to satisfy or further the organization’s exempt purposes (aside from the need of such organization for income or funds) and for which (a) there is no ready market to which the organization can go to liquidate the contribution and convert it to cash, and (b) the value of the item is highly speculative or difficult to ascertain.


Capin Crouse article: The Why & What of a Gift Acceptance Policy

Wrapping up a gift acceptance policy

When you receive a gift from a contributor, do you immediately feel fortunate and quickly send a thank-you note from your organization? That may be a mistake, because not all gifts are created equal. Having a written gift acceptance policy in place — and using it to decide whether you should accept a donation — is important to your organization’s balance sheet, work load, and reputation.

Saying “no” to a gift

While it might be human nature to accept gifts graciously, some nonprofits are turning certain gifts down. The Wall Street Journal reported, for example, that officials at the Cleveland Museum of Art, the Indianapolis Museum of Art, and the Houston Museum of Fine Arts often decline gifts over quality, condition, space limitations, and unsuitability to the museums’ missions.

A gift acceptance policy provides an objective way to decline a gift but still maintain a good relationship with the contributor. A written policy removes focus or blame from the contact person and makes it clear that rejection of a gift is the result of policies set in the past.

Moreover, a gift acceptance policy contributes to good governance because it disciplines your organization to weigh the advantages and disadvantages of accepting and administering a gift. Also, the revised IRS Form 990 asks nonprofits if they have a gift acceptance policy if they receive more than $25,000 in noncash contributions. (A policy isn’t legally required, and the form currently solicits no details.)

Finding a perfect fit

A strong gift acceptance policy defines the types and forms of assets that are acceptable and your organization’s role in gift administration. It should contain these elements:

  • Your mission,
  • The policy’s purpose,
  • The types and forms of acceptable gifts,
  • The circumstances in which a gift should be reviewed by an attorney,
  • An acknowledgement of reporting requirements,
  • The role of a gift acceptance committee, and
  • An annual review of gifts.

Mold your policy to fit your nonprofit’s size and characteristics. Developing the policy should be a collaborative process between your board, planned-giving staff (if applicable), finance personnel, program administrative staff, and management.

Judging what you can handle

When forming your gift acceptance guidelines, start with a self-assessment. Your nonprofit must determine its ability to manage each type and form of gift. For example, you may not want to accept gifts of real estate if your organization isn’t staffed to manage the property or isn’t willing to act as the landlord.

In another example, tangible personal property such as furniture or stamp collections may need insurance, special display cases, or off-site storage. This could require your organization to incur substantial out-of-pocket costs for years to come. Ask yourself if your nonprofit has the resources — and desire — to manage such gifts.

All policies should state that gifts which conflict with your organization’s mission should be rejected. (A diabetes organization, for example, might not want to accept investments in sugar companies). The policy also should address how gifts will be managed and invested (if applicable) and how the nonprofit will dispose of them.

Pay special attention to any restrictions that donors place on gifts. Almost all organizations prefer unrestricted gifts so they can use the funds as they wish. But donors of personal tangible property likely will want to specify how their gift will be used. Organizations that prohibit input from donors may find it difficult to raise large amounts of funds.

Understanding what’s what

Here are the main types of gifts and some special considerations that accompany them:

  • Current gifts – A current gift involves the donor’s transfer of money or property to the charity, without any future obligation to the donor. Although the donor may place restrictions on the property’s use, the donor can’t retain control over the money or property transferred to the charity.
  • Split-interest gifts – With a split-interest gift the donor makes an irrevocable transfer of an interest in an asset to the charity, but retains either an income stream or the remainder interest. Your planned-giving program may include charitable gift annuities, gifts of remainder interests in a personal residence or farm, charitable remainder trusts, charitable lead trusts, or pooled income funds. Because split-interest gift arrangements have continuing investment responsibilities and obligations to the donor or the donor’s family, you must have the staff and resources to monitor the gift to protect both the donor and your nonprofit.

Gifts requiring special attention include:

  • Securities – Securities and other business interests that aren’t regularly and publicly traded may be hard to value and sell.
  • Real estate – Real estate should be investigated for hazardous waste before acceptance.
  • The donation of a business – Accepting the donation of an actual business might put your tax exemption at risk, or cause you to stray from your mission. Note particularly the perils of owning S corporation stock.

Also note that abuses involving intellectual property, vehicles, easements, works of art, and collectibles and gifts earmarked for named individuals have resulted in increased scrutiny. Special reporting obligations may apply.

Addressing other matters

A gift acceptance policy also can include language about charitable bequests, specific endowments, and chair or other naming opportunities, and set out the dollar limits and pledge restrictions. Large organizations often need more extensive policies to ensure proper communication and consistency than smaller nonprofits.

Getting an outside opinion

Your financial advisor and an attorney should review your gift acceptance policy before it comes before the full board for approval. Finally, review your policy annually. Resources could change, and your experiences might dictate revision.


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