Nonprofit Accounting Basics

Drafting a Gift Acceptance Policy

A gift acceptance policy explains an organization’s position on accepting both cash and non-cash gifts and outlines any prohibitions on the type of donor or donations to be accepted by the organization. Organizations may base any limitations on a potential conflict with the organization’s core mission (i.e., a youth group might decide not to solicit or accept a contribution from a tobacco company, liquor company or firearms manufacturer), or the lack of capacity for the organization to process certain non-cash gifts such as vehicles.  

Developing a such a policy allows the organization’s leadership to be thoughtful and thorough, to consider in advance a variety of scenarios, and to calmly discuss and determine the organization’s position on these before having to make an immediate decision about a particular gift. Pointing to an officially adopted policy makes refusing a gift far less awkward and personal than doing so ad hoc without guidelines. Having these in place also allows the organization to respond affirmatively to IRS 990, Schedule M, Questions 31 and 32 a-b, which asks about a gift acceptance policy.

A policy could provide details regarding the acceptance and disposition of donated stock and/or limitations on types of non-cash contributions (in-kind services or supplies, yes? Vehicles, no?). It can put forth procedures for acknowledging, accounting for, and reporting on all types of gifts (see IRS Publication 1771 “Charitable Contributions—Substantiation and Disclosure Requirements” for further information

The policy could also cover an organization’s plan for donor privacy, spelling out the conditions under which the organization may/will disclose information about the donor and the gift and how the donor’s data will be protected.

Please follow the link to a Gift Acceptance Policy Development Outline for Small and Midsize Organizations to get started.

© 2022 Elizabeth Hamilton Foley