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Gift Acceptance and Acknowledgement:  What You Need to Know

Gift Acceptance and Acknowledgement:  What You Need to Know

A Gift Acceptance Policy (GAP) is more than just a policy adopted so you can check the “yes” box on your 990.  It is an important tool for every organization to have and keep updated. Having a GAP in place allows your organization to tactfully accept or decline donations. There are some gifts that may be more of a burden than a blessing to an organization. Certain noncash gifts could lead to financial strains or legal obligations for the receiving organization.

Your Gift Acceptance Policy
Your gift acceptance policy should provide your board and staff with clear guidelines on how to handle unusual gifts. This allows your representatives to point to a written policy to provide guidelines and standards for accepting or denying a gift, as compared to trying to think of an explanation without insulting the donor.

When creating your GAP, consider the following aspects:

  • Mission of the organization
  • Purpose of the policy
  • Use of legal counsel by either the donor or the organization
  • Donor conflicts of interest
  • Restricted gifts
  • Gift acceptance committee
  • Type and form of gift
  • Reporting requirements
  • Monitoring

Technology and Gift Acceptance
Most organizations have historically accepted financial assets (cash, securities, etc.)  The gift acceptance policy should also address nonfinancial assets. As technology advances continue, it is important to consider the implications of unfamiliar financial assets. Cryptocurrency, a virtual currency independent of a central bank or government, is gaining mainstream attention and with that comes the potential for someone to donate it to your organization. Cryptocurrency is a type of currency that is held digitally and can be used for purchasing, selling, and storing value.

As digital trends continue, it is important to frequently update your policies and procedures to keep pace.  As with all digital activity, there are many security risks with accepting and holding cryptocurrency.  You should determine the risk tolerance of your organization and document your decision on cryptocurrency in your gift acceptance policy.

Acknowledging Donors
As with all donations, you must follow the IRS regulations for acknowledging donors.  The regulations for noncash contributions encompass the requirements for noncash assets, including cryptocurrency.  It is important that donors have the proper acknowledgement identifying their donation.  The final IRS regulations issued in 2018 identify donor requirements for noncash donation substantiation as follows:

Documentation Required for Donor Substantiation Based on Gift Value

Noncash Gift Value Acknowledgement Letter Required Form 8283 Qualified Appraisal Appraisal Attached to Donor Return Form 8283 attached to carry-forward years
Less than $250 No - Receipt only        
$250-$499 Yes        
$500-$4,999 Yes Section A     Yes
> $5,000 Yes Section B Yes   Yes
> $500,000 Yes Section B Yes Yes Yes

Article written by Marybeth C. Olree. For additional information contact us at info@herbein.com

April 10 Nonprofit Seminar CTA