Critical Role of Gift Policies

Critical Role of Gift Policies

April 30th, 2015

by Andy Canada


Are all “gifts” created equal? We generally say that it takes all types of gifts to move an organization forward and we want to make our donors feel as good as we can about their intent to make a gift in support of the organization.


But, as hard as it is to acknowledge, some gifts may come with too many strings attached or cost the organization valuable resources to manage the gift or meet the donor’s expectations.


Think of a piece of property with environmental issues, unmarketable assets that can’t be sold, gifts with so many restrictions that you can’t utilize the funds, or donors that request a great deal of reporting and tracking for a gift that might not be large enough to support such requests.


While we might see the difficulties of such gifts, we don’t want to make the donor upset or say no to a gift. In most cases, the donor wants to help and feels their gift is benefiting the organization. You don’t want to upset the donor but you also don’t want to hurt the organization in the long run.


While there is no way to completely prevent these situations from arising, there are some steps that you can take now to help protect the organization. Establishing gift acceptance and recording policies creates clear expectations with a potential donor early in the process.


Gift policies can be invaluable to help guide the conversation and ensure that everyone in the organization is on the same page regarding acceptance and counting of gifts.


Gift acceptance and recognition policies should clearly outline the various gift vehicles that the organization will accept and provide details on the process that the organization will undertake in accepting gift.


They also should provide an overview on how the gifts will be recognized. For cash gifts this is pretty straightforward but for other types of gifts it can be more complicated. For instance, with a gift of real estate – will you require an environmental study, who within the organization has to approve of the gift before it can move forward?


Deferred gifts come in all shapes and sizes so the policy should address each type of deferred giving vehicle because a charitable reminder trust will have to be handled differently than a charitable gift annuity or a simple bequest.


In many cases, a gift counting policy will be incorporated into the gift acceptance policy, but the gift counting policy will examine how an organization will account for gifts that are received. This is especially important when entering a campaign or a major gift initiative. Again, cash gifts are pretty straightforward but how do you count a gift when a 40-year-old donor tells you that they have named you as a beneficiary on a life insurance policy? It is wonderful they are thinking about your organization, but will it benefit the project that they wish to support? It is important to clearly define what type of gifts will be counted.


A capital campaign that is only supported by deferred gifts is probably not going to help get a new facility built. It doesn’t mean that you turn away the gift but the document allows you to have an authentic conversation with your donors before the gift is made so that they fully understand the impact of their gift.


As these policies are being developed it is important to engage the development/advancement

office, the finance department, leadership within the organization, and the board. All parties need to be in agreement on the documents and the policies should be approved by the board.


A little time spent now can protect you and the organization down the road. They can also provide you with supporting documents that you can show a donor when they want to make a gift or get recognition for a gift that doesn’t match up with the goals of the organization.






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