Tag Archives: Bequests

Should You Accept ANY and EVERY Donation? Why you need a Gift Acceptance Policy

By David A. Mersky

A beloved member of the community died after a long illness. Her husband and her friends wanted to honor her memory with a fund that would sponsor professional development programs. They turned to the organization on whose board the deceased woman had served for many years and suggested that they would make a gift of $100,000 to start a named fund that would underwrite annual staff training programs.

The organization’s executive director was thrilled…until she learned that the gift came with restrictions. First, the grieving husband would manage the funds.  Also, he would have veto power on any programs undertaken in his late wife’s name. Further the friends said that they would like to run two annual fundraisers exclusively for the fund among the supporters of the organization.

Our client, the executive director politely said, “Thank you, but no thank you.” She told the donors that the plan was not in compliance with the organization’s Gift Acceptance Policy. She explained that the board had tasked the foundation committee who employed professional managers to invest the assets of the organization and no individual donor would be permitted to manage any part of gifted assets. Further, the program committee and staff decide what programs to provide.

The Gift Acceptance Policy made all this very clear.

And, if your organization does not have such a statement then you should begin to create one now.

Why do you need a Gift Acceptance Policy?

  • …so you will know how to respond no matter what unexpected gift is offered.
  • …a reason to pause before you say “yes” or “no, thank you.”
  • …time and space to evaluate any donation.
  • …if the gift acceptance policy says no to a type of donation, e.g., non-publicly traded securities, it saves time and cost of considering each gift on a case-by-case basis.
  • …so you can respond more quickly and more confidently.
  • …to tell donors that gift valuations for gifts of tangible property—and the cost for appraisals—are their responsibility

What should a Gift Acceptance Policy Contain

  • Introduction—the organization solicits and accepts gifts to fulfill mission
  • What are acceptable gifts and conditions?
    • Cash
    • Checks
    • Credit cards
    • Pledges
    • Publicly traded securities
  • Which gifts require Board approval upon due diligence
    • Closely held securities
    • Real estate
    • Life insurance
    • Tangible personal property
  • What kinds of planned gifts are acceptable?
    • Bequests
    • Charitable gift annuities
    • Deferred gift annuities
    • Charitable remainder trusts
    • Charitable lead trusts
    • Retained life estates
  • What are the minimums for named endowment funds?

Above all, as you draft your gift acceptance policy be sure to check with your lawyers and accountants. But, when you write the policy statement, be sure to maintain a friendly tone, avoid legalese, and negative language.

Hopefully, you will never have to decline a gift. With a gift acceptance policy, you will be prepared for any eventuality.

You might wonder if you could regret turning down a contribution. More importantly, with a gift acceptance policy, you will never regret accepting one, either.

If you would like a free, 30-minute consultation to speak about your Gift Acceptance Policy, or anything else, Click here to schedule a time with me.

Takeaways from the 2018 Giving USA Report

2018 Giving USA ReportNonprofits, and nonprofit consultants, have learned to value the annual release of the 2018 Giving USA Report. It has 470 pages of interesting facts and figures. And if you know what to do with them, and how to benchmark yourself against them (more on that later), they can be very useful tools. If you only look to see that giving has grown for environmental and animal nonprofits but dropped for religious giving, you are getting caught in the hype.

Here are key takeaways from the 2018 Giving USA Report and how they can impact your organization’s donations for 2019:

      1. For the first time since 2009, individual giving dropped (total giving in current dollars increased by .7%). Currently we don’t know if that is due to fewer people able to take tax deductions on charitable contributions, a large push to frontload donations to DAFs, Foundations and individual donations prior to tax law changes is unclear, or economic uncertainty at the end of the year.

        Our advice?

        Ignore the decrease in individual giving. Instead, focus on the $292.09 BILLION that was given by individuals last year. That is a lot of money available to nonprofits. Make sure you know and have a plan for your organization’s development data such as your donor retention, donor’s lifetime value, and the number of monthly donors. Click here if you would like to talk to us about calculating your important statistics and how they benchmark against others.

      2. Giving by corporations increased this past year. We don’t know if that is thanks to increased profits at those companies, increased public concern, or increased public awareness of corporate donation policies (think: marketing/social media benefits that attract younger purchasers who want to “do good” when they buy)

        Our advice?

        Corporate giving is still only 5% of all giving. Unless you are a nonprofit that has a benefit for the corporation to align with corporations’ marketing, target market, and location, you should focus your development efforts on individuals.

      3. Giving by foundations increased 7.3% in current dollars over 2017. Are more foundations paying out higher pecentage of assets? Do foundations feel an increased need, particularly among underserved populations, to which they are responding? We don’t know, but we know it is an area to keep on our radar.

        Our advice?

        Giving by foundations is now $74.86 billion. Giving USA estimates that 64% of independent foundations are family foundations (and 45.6% of total foundation giving.) That is $34.58 billion of foundation giving that should be treated like individual giving. To attract and retain these donors, see #1.

      4. Bequests grew by 14.7% in 2017 but leveled off in 2018. Was that because the organizations who put in effort years before were finally realizing gifts? Or maybe health nonprofits were more successful in extending life (positive thinking!)?

        Our advice?

        Bequest donations may have not increased last year, but 2017’s report showed dramatic results with close to $40 billion transferred in this way. These donors are often low-hanging fruit. They are donors who already care about your organization but need a little education about how impactful this kind of gift can be to your nonprofit. Click here to learn more about bequests estate gifts. Think you don’t have those high-level donors who have millions to give? Consider the breakdown of estimated bequest giving from estates with assets:

        1. Of $5 million or above amounted to $21.44 billion
        2. Between $1 and $5 million amounted to $8.36 billion
        3. Below $1 million amounted to $9.91 billion
      5. Giving to arts, culture and humanities, environmental and animal organizations as well as international affairs organizations were the big winners last year. The amount given to those organizations were either stable or increased.

        Our advice?

        I would venture to say that increased giving to the arts, environment/animals and international nonprofits may not be a coincidence. Those are areas that may be receiving less governmental support and people are worried about their ability to sustain their mission. Don’t count yourself out if you are small or niche.  Give donors a compelling reason to give again and again and they will.

      6. Giving as a percentage of disposable personal income has remained between 1.9% and 2% for the past 5 years.

        Our advice?

        If you focus on doing the right things – identifying, interesting, involving, asking, acknowledging, thanking, stewarding, creating donor-centric campaigns, surveying, investing, different ways of engaging etc., you will raise more money. Staying the same is no longer sufficient just to raise the same amount of money as previous years.  Every nonprofit needs to be considering ways to strengthen their fundraising and development.  If you would like ideas on how to do this, email me today.