Creating a nonprofit gift policy is essential for protecting your organization and managing donations responsibly. A well-written policy will outline which types of donations are accepted, how they will be evaluated, and how donors will be recognized. This helps ensure that all gifts align with your nonprofit’s mission and provides a clear process for managing complex or restricted contributions.
Below, we’ll dive into the key components of a nonprofit gift policy and provide tips on how to structure it for maximum effectiveness.
Key Components
1. Gift Acceptance Criteria
Your policy should clearly define the types of gifts your nonprofit will accept, including:
- Cash Donations: Always welcome, but ensure clarity about whether unrestricted or restricted funds are allowed.
- Securities (Stocks and Bonds): Consider how you will handle the transfer and valuation of stocks and securities.
- Real Estate: Set criteria for property gifts, including location, condition, and environmental liabilities.
- In-Kind Donations: Specify which goods or services you will accept and how they will be valued.
- Planned Gifts: This includes bequests, trusts, and annuities. Make sure to outline any criteria or restrictions for these gifts.
By establishing these criteria, your organization can make informed decisions about whether a gift should be accepted based on its potential benefits and risks.
2. Gift Valuation Process
Donations such as real estate, stocks, or in-kind gifts require accurate valuation. Your gift policy should explain how these gifts will be appraised to determine their fair market value for tax and reporting purposes. This ensures transparency and compliance with IRS regulations and helps avoid potential conflicts with donors.
3. Gift Designation and Use
Clarify how gifts can be designated. Some donors may restrict their gifts to a particular program or project, while others may allow their donation to be used at your discretion. Your gift policy should include guidelines on how restricted and unrestricted gifts will be handled and ensure that any restrictions align with the strategic goals of your nonprofit.
4. Handling Unacceptable Gifts
There will be instances when it’s necessary to decline a donation, whether due to logistical, financial, or ethical concerns. Your gift policy should outline the process for declining a gift, including criteria such as:
- Misalignment with your mission
- Legal restrictions
- Potential liabilities
- Excessive costs associated with accepting the gift
Establishing a process for declining gifts ensures that these decisions are made thoughtfully and consistently while maintaining positive relationships with donors.
5. Donor Recognition and Stewardship
Recognizing and thanking donors for their contributions is essential for building long-term relationships. Your gift policy should outline how you will recognize donors based on the size and type of gift. This could include public acknowledgment, donor walls, naming opportunities, or invitations to special events.
Clearly defined recognition standards also ensure fairness and consistency in how donors are celebrated.
6. Donor Confidentiality
Confidentiality is critical for maintaining trust with your donors. Your policy should state that personal donor information will remain private unless the donor explicitly agrees to public recognition. This helps build donor trust and aligns with nonprofit best practices for data protection.
A Gift Policy Is a Key to Effective Donor Management
A gift policy is much more than a list of acceptable donations—it is a vital tool for managing donor relationships, maintaining legal compliance, and ensuring that contributions are used in ways that support your nonprofit’s mission. By creating a clear and comprehensive gift policy, your organization can handle donations responsibly and build lasting relationships with your supporters.
As consultants, BryteBridge Nonprofit Solutions is here to help you navigate this journey and unlock your nonprofit’s full potential. For more information, join BryteBridge Connect Membership for Live Bootcamps, Webinars, and classes. Speak to a BryteBridge Consultant today by calling 877-857-9002.
