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Do We Need A Gift Acceptance Policy?

best practices board funding Sep 15, 2022
 

Nonprofits rely on the generosity of people to fund their mission. The IRS reports that most people give from their cash, even though their wealth is in non-cash assets.

I have some friends at MortarStone who are good at helping churches, especially converting this opportunity into new ways to serve their congregation. Mortarstone estimates 90% of what a person can give is non-cash or not in cash. As a nonprofit, you can enhance the opportunities for your givers by being set up to receive donations of these non-cash assets.

In my experience, one of the most common non-cash assets is investments, whether it's stocks, bonds, or mutual funds. Let’s look at how to be set up to receive these non-cash donations.

 

Step 1: Create A Brokerage Account

First, you need to create a brokerage account that can receive direct transfers of the investments. The tax benefits happen when the investment, is directly transferred to the nonprofit as compared to the individual selling it and giving the cash. There's a tax advantage if the donation is directly transferred as an asset.

 

Step 2: Setup Gift Acceptance Policy

The second thing you'll need is a gift acceptance policy. The policy should include: 

  • Types of non-cash assets you'll accept. Sometimes people want to donate things that come with liabilities or obligations. You want to be clear upfront on what your organization receives.
  • A statement about the review process that the organization will take to determine if the asset can be accepted. This allows you to address if there are liabilities or conditions on the gift. It will be reviewed by a designated group, a committee, or a board before being accepted.
  • Clarity about what will be done with those assets once you receive them. It is the best practice to sell them. Within 7 to 10 business days is best practice.

 

Once you have completed these preparations, begin to share this opportunity with your donors.  Some ways to do this include your website, your newsletter and year-end giving letters. 

Creating additional ways for people to give will help the make sure your mission is funded!

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