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					70       Stewardship for Mission: Where Development and Finance Meet




                                                    Chapter 6
                              Gift Acceptance Procedures

                          Suggested Gift Acceptance Policy Issues
                                                   Laura Fredricks
                         Developing Major Gifts: Turning Small Donors into Big Contributors
         2001: Aspen Publishers, Inc., Gaihtersburg, MD, Jones and Bartlett Publishers, Sudbury, MA. www,jbpub.com.
                                                Reprinted with permission



  It is critical to the religious institute to have a gift acceptance policy and clearly defined procedures in this regard.
In preparing such a document, Ms. Fredricks suggests that the following issues be considered:


1) What type of gift (outright, life income, deferred,          12) How does the organization invest its named
in-kind) will the organization accept?                          funds?
2) Under what circumstances will a gift be declined?            13) What are the guidelines on how gifts are valued?
3) Are there established gift levels and gift amounts           14) What are the minimum amounts used to
for named funds/facilities/programs/services/                   establish the various planned gifts?
equipment?
                                                                15) What are the guidelines for life income and
4) Who will be responsible for soliciting different             deferred gifts, such as minimum / maximum pay out,
gifts at different levels?                                      number of beneficiaries, and term of years?
5) Who will be responsible for accepting different              16) Under what circumstances will the organization
gifts at different levels?                                      serve as trustee for charitable trusts?
6) Who will acknowledge different gifts at different            17) Will the organization require written proof
levels?                                                         before it will recognize a bequest or gift via a will?
7) How will gifts at each level be recognized?                  18) How does the organization recognize / credit
8) Will cumulative gifts / past gifts be credited for           gifts that are revocable?
larger gift levels?
                                                                19) What are the guidelines for accepting gifts of
9) How will matching gifts be recognized for over-              real estate transfer, land surveys, appraisals, title
all gift levels?                                                search, bills, and taxes?
10) How will the gifts be tracked?                              20) Who pays the costs for the real estate transfer,
                                                                land surveys, appraisals, title search, bills, and taxes?
11) What banks and financial services does the
organization use to invest / manage its funds?
                                                           Chapter 6: Gift Acceptance Procedures         71


                               Sample Gift Acceptance Policy (continued)


21) Will a gift acceptance policy committee be            23) Will the organization consider exceptions to
formed to oversee and carry out the terms of the          the policy and, if so, under what circumstances?
policy?
                                                          24) How and under what circumstances will gift
22) Under what circumstances will the organization        agreements be dissolved?
use outside counsel?



       Since 2002, Laura Fredricks, JD, has been Vice President for Philanthropy at Pace University in
       New York, NY. Ms. Fredricks also teaches nonprofit business management and major gift and
       planned giving courses at the University of Pennsylvania, Duke University, and the Smithsonian
       Institute and is a featured speaker at a variety of professional conferences.
72       Stewardship for Mission: Where Development and Finance Meet



                                 Sample Gift Acceptance Policy


  This sample of a Gift Acceptance Policy is printed        of Development and several other appropriate
with the permission of the religious institute that         people (perhaps an attorney, financial planner, etc.).
developed the policy. It reflects attention to legal          These policies and guidelines should in no way
considerations as well as the development                   be understood as legal or financial advice to the
opportunities that are acceptable to this religious         donors. All donors are encouraged to seek
institute. The policy must be adapted according to          appropriate professional advice from their legal
the environment and needs of each religious                 counsels or financial planning advisors.
institute. In addition to the following sample Gift
                                                                               Outright Gifts
Acceptance Policy, a sample Development Fund-
raising Policy is found in the Appendix pp. 100-111.        Cash
                                                            1. Gifts in the form of cash and checks shall be
                     Introduction
                                                            accepted regardless of amount unless, as in the case
   In order to respect the interests of the religious       of all gifts, there is a question as to whether the
institute and the persons who support its                   donor has sufficient title to the assets or is mentally
programs, these policies are designed to assure that        competent to legally transfer the funds as a gift to
all gifts to or for the use of the religious institute      the religious institute.
are structured to provide maximum benefits to               2.All checks should be made payable to the religious
both parties. The goal is to encourage funding of           institute and should not be made payable to an
the religious institute without encumbering the             employee, agent, or volunteer representing the
organization with gifts which may prove to generate         religious institute.
more cost than benefit or which are restricted in
                                                            Publicly Traded Securities
a manner that is not in keeping with the mission of
                                                            Publicly traded securities or other readily
the religious institute. The authority to accept gifts
                                                            marketable securities shall be accepted by the
resides with the religious institute’s Board of
                                                            religious institute unless prohibited by its
Trustees.
                                                            investment policy. An employee or volunteer
   To optimize funding from individuals and
                                                            working on behalf of the religious institute should
organizations, the religious institute must be capable
                                                            not commit to a donor that a particular security
of responding quickly to all gifts offered by
                                                            will be held by the religious institute. If the donor
prospective donors. It is understood that, except
                                                            wishes the security to be held, and it is not in the
where stated otherwise, these policies are intended
                                                            religious institute’s portfolio, the gift acceptance
as guidelines and that flexibility must be maintained
                                                            committee will make the determination.
since some gift situations can be complex; and
decisions can only be made after careful                    Closely Held Securities
consideration of a number of interrelated factors.          1. Non-publicly traded securities may only be
The religious institute’s Board of Trustees should          accepted after approval of the gift acceptance
appoint a Gift Acceptance Committee to judge the            committee.
merits of accepting certain gifts. It is recommended        2. Such securities may be subsequently disposed
that the Committee consist of the religious                 of only with the approval of the gift acceptance
institute’s Treasurer, the religious institute’s Director   committee.
                                                          Chapter 6: Gift Acceptance Procedures             73


                                Sample Gift Acceptance Policy (continued)

3. No commitments shall be made for the                  personal property shall be accepted that obligates
repurchase of such securities by the religious           the religious institute to ownership for a specified
institute prior to completion of a gift of securities.   period of time. No perishable property or property
                                                         which will require special facilities or security to
Real Property
                                                         properly safeguard it will be accepted without prior
1. No gift of real estate shall be accepted by anyone
                                                         approval of the gift acceptance committee.
on behalf of the religious institute without prior
                                                         3. Only the gift acceptance committee or persons
approval of the gift acceptance committee of the
                                                         authorized by the gift acceptance committee to do
religious institute.
                                                         so may represent to a donor that property will or
2. No gift of real estate shall be accepted without
                                                         will not be held by the religious institute for a
first being appraised by a party chosen by the
                                                         specific period of time or for purposes related to
religious institute who shall have no business or
                                                         its tax- exempt status. Donors should be notified
other relationship to the donor.
                                                         at the time of receipt of a gift that the religious
3. The gift acceptance committee must determine
                                                         institute will, as a matter of corporate policy,
that the title is good and marketable. It will be
                                                         cooperate fully in all matters related to IRS
necessary to research any potential environmental
                                                         investigations of non-cash charitable gifts.
issues and an environmental audit may be required.
4. No commercial real estate shall be accepted by        Other Property
anyone on behalf of the religious institute without      Other property of any description including
prior approval of the gift acceptance committee.         mortgages, notes, copyrights, royalties, easements,
5. Real estate shall not be accepted to fund a           whether real or personal, shall only be accepted
charitable gift annuity without seeking an opinion       by action of the gift acceptance committee.
as to the permissibility of this action under the laws   Appropriate inquiry shall be made and special
of the state or states involved and approval by the      consideration shall be given to the nature of any
gift acceptance committee.                               gift property and whether it is in keeping with the
6. The religious institute will accept no real estate    mission of the religious institute prior to the
encumbered by a mortgage.                                acceptance of any property by the religious institute.
Tangible Personal Property                                                 Deferred Gifts
1. Jewelry, artwork, collections, automobiles, and
                                                         Bequests
other personal property may be accepted. A
                                                         1. Gifts through Wills (bequests) shall be actively
qualified appraisal under terms of the Internal
                                                         encouraged by the religious institute.
Revenue Code governing gifts of such property
                                                         2. In the event of inquiry by a prospective legator,
must be obtained by the religious institute. Such
                                                         representations as to the future acceptability of
property can only be accepted by the gift
                                                         property proposed to be left to the religious
acceptance committee or such other person or
                                                         institute in a Will, or through any other deferred
persons authorized to do so by the gift acceptance
                                                         gift arrangement, shall only be made in accordance
committee.
                                                         with the terms and provisions of outright gifts
2. The religious institute shall accept no personal
                                                         included in this document.
property unless there is reason to believe the
                                                         3. Gifts from the estates of deceased donors,
property can be reasonably disposed of. No
                                                         consisting of property that is not acceptable under
74      Stewardship for Mission: Where Development and Finance Meet


                                 Sample Gift Acceptance Policy (continued)

these guidelines, shall be rejected only by action of     be marketed as tax avoidance devices or as
the gift acceptance committee. The legal counsel of       investment vehicles.
the religious institute shall communicate the
                                                          Pooled Income Funds
decision of the gift acceptance committee to the
                                                          The religious institute will not accept pooled income
legal representative of the estate. If there is any
                                                          funds.
indication that the representative of the estate, or
any family member of the deceased, is dissatisfied        Charitable Gift Annuities
with the decision of the gift acceptance committee,       1. No gift annuity shall be accepted which names
this fact should be communicated to the gift              an income beneficiary under 60 years of age
acceptance committee as quickly as possible.              without prior approval of the gift acceptance
4. Attempts shall be made to discover bequest             committee.
expectancies wherever possible in order to reveal         2. There shall not be more than two income
situations that might lead to unpleasant donor            beneficiaries for each gift annuity.
relations in the future. Where possible, intended         3.The minimum initial contribution for a gift annuity
bequests of property other than cash or marketable        shall be $5,000.
securities should be brought to the attention of          4. The minimum contribution for an additional gift
the gift acceptance committee and every attempt           annuity by an individual who has previously entered
be made to encourage the donor involved to                into a gift annuity agreement shall be $5,000.
conform his or her estate plans to the religious          5. No deferred annuity gifts will be accepted.
institute policy.                                         6. No gift annuities will be accepted from the
                                                          following states: California, Florida, Maryland, Maine,
Charitable Remainder Trusts
                                                          Minnesota, New Jersey, New York, North Dakota,
1. The religious institute will not serve as sole or
                                                          Oregon, Washington, and Wisconsin.
co-trustee of a charitable remainder trust for the
benefit of the religious institute.                       Life Estate Gifts
2. The religious institute will not recommend any         1. Donors shall generally not be encouraged to
corporate fiduciary to a donor.                           make gifts of real property to the religious institute
3. The fees for management of a charitable                under which they maintain a life interest in the
remainder trust will not be paid by the religious         property.
institute.                                                2. Such gifts may be accepted by approval of the
4. No representations shall be made by any                gift acceptance committee in situations where the
employee or other persons acting on behalf of the         asset involved appears to be a minor portion of
religious institute as to the manner in which             the donor’s wealth, and the committee is satisfied
charitable remainder trust assets will be managed         that there has been full disclosure to the donor of
or invested by a corporate fiduciary.                     the possible future ramifications of the transaction.
5. Charitable remainder trusts and all other deferred     Gifts of Life Insurance
gifts shall be encouraged as a method of making           1. The religious institute will encourage donors to
gifts to the religious institute while retaining income   name the religious institute to receive all or a portion
which may be needed by the donor or other                 of the benefits of life insurance policies which they
persons chosen by the donor. Such trusts shall not        have purchased on their lives.
                                                              Chapter 6: Gift Acceptance Procedures               75


                                   Sample Gift Acceptance Policy (continued)

2. The religious institute will not agree to accept          cases which appear excessive, the summary of fees
gifts from donors for the purpose of purchasing              shall be submitted to the religious institute’s corporate
life insurance on the donor’s life.                          counsel for review and approval prior to payment.
                                                             5. In cases where the persons receiving fees were
        Payment of Fees Related to Gifts
                                                             initially employed by the donor and the religious
           to the Religious Institute
                                                             institute is asked to pay the fees involved, the donor
Finder’s Fees or Commissions                                 shall be notified that the payment of such fees may
1. The religious institute will pay no fee to a person       result in taxable income to the donor in the
as consideration for directing a gift to the religious       amount of the fees paid.
institute.                                                   6. In situations where advisors retained by the
2. No commission or finder’s fee will be paid to any         religious institute prepare documents or render
party in connection with the completion of a gift            advice in any form to the religious institute and/or
to the religious institute.                                  a donor to the religious institute, it shall be
Professional Fees                                            disclosed to the donor that the professional
1. The religious institute will pay reasonable fees          involved is in the employ of the religious institute
for professional services rendered in connection             and is not acting on behalf of the donor and that any
with the completion of a gift to the religious institute.    documents or other advice rendered in the course
2. Such fees will be paid only following discussion          of the relationship between the religious institute
with and approval by the donor.                              and the donor should be reviewed by counsel for
3. Fees shall be reasonable, and directly related to         the donor prior to completion of the gift.
the completion of a gift. They shall be limited to                           Restrictions on Use
appraisal fees by persons who are competent and                            and Investment of Gifts
qualified to appraise the property involved and who
                                                             A. Restricted gifts will be accepted by the religious
have no conflict of interest, legal fees for the
                                                             institute. In the case of current gifts prior approval
preparation of documents, accounting fees incident
                                                             of the gift acceptance committee is required.
to the transaction, and fees of “fee for service”
                                                             Subsequent approval by the gift acceptance
financial planners. In the case of financial planners,
                                                             committee is required in the case of gifts received
such persons must state in writing that they are
                                                             after death which have not been previously
compensated only through fees for services rendered
                                                             approved by the gift acceptance committee.
and that they are not compensated for the sale of
                                                             B. Gifts donated with restrictions as to use and/or
products to clients. This distinction is vital in avoiding
                                                             investment will be reviewed by the gift acceptance
the payment of commissions which could be
                                                             committee as to whether the gift will be accepted.
construed as triggering securities regulation.
                                                             C. Restricted gifts which do not receive the
4. In the case of legal, accounting and other
                                                             approval of the gift acceptance committee will not
professional fees, an attempt shall be made by the
                                                             be accepted by the religious institute.
gift acceptance committee to ascertain the
reasonableness of these fees prior to payment. An
hourly breakdown of time should be requested. In

For sample Gift Acknowledgment Letters, see Appendix pp. 112-116
76      Stewardship for Mission: Where Development and Finance Meet



                         New Tax Rules for Donated Vehicles
                                          Susan Arvanitis, MST, CPA


  The American Jobs Creation Act, signed into law          • Amount received from sale of car
in the fall of 2004, contains provisions that              • Warning that the donor’s charitable
substantially change the rules for calculating the       contribution deduction for federal income tax
value of a vehicle donated to charity. Effective         purposes is limited to the amount received by the
January 1, 2005, tax-exempt organizations (such as       organization from the sale of the car.
our Retreat Centers and Communities) that receive
                                                                         What is deductible?
donated vehicles must provide donors with an
entirely new set of detailed information for federal       The donor’s income tax deduction is limited to
income tax purposes. These new rules apply to            the sales proceeds received by the charitable
vehicles having a claimed value more than $500.          organization for the car.
(For vehicles valued at $500 or less, the existing                          Vehicle is Kept
rules still apply.)
                                                           If your Community or Retreat Center
  In the past, when an individual or company
                                                         determines that the car will be kept and used by
donated a car to charity, the donor would estimate
                                                         the religious, then you must provide a written
the value of a car donated, and simply report this
                                                         receipt or letter to the donor within 30 days of
amount as a charitable contribution deduction on
                                                         the date you received the car. The receipt must
the appropriate tax return. Sadly, the IRS and
                                                         state:
Congress concluded that this approach encouraged
                                                           • Name of donor
donors to overvalue their vehicles, while the charity
                                                           • Social Security Number of donor (or FEIN, if
later sold the car — for a much lesser value. Under
                                                         donor is a company)
the new rules, a donor’s income tax deduction for
                                                           • Description of vehicle (make, model, year)
a donated vehicle will likely differ, depending on
                                                           • Vehicle Identification Number (VIN)
whether the organization receiving the vehicle
                                                           • Certification as to how the organization intends
decides to sell or keep it.
                                                         to use the vehicle (e.g., in local ministry, for mission
                  Vehicle is Sold                        appeals, etc.) and for how long (e.g., for the remaining
  If your Retreat Center or Community receives a         useful life of the vehicle, estimated at “x” years)
donated car and decides to sell it, you must provide       • Certification that the car will not be transferred
a written receipt or acknowledgment letter to the        in exchange for money, property or services prior
donor within 30 days of the date the car was sold.       to the completion of the intended use.
  This receipt must state:                                               What is deductible?
  • Name of donor
                                                            The donor may deduct the “fair market value” of
  • Social Security Number of donor (or FEIN, if
                                                         the car as of the date of donation. In this instance,
donor is a company)
                                                         it is the donor’s responsibility to determine the
  • Description of vehicle (make, model, year)
                                                         fair market value – your tax receipt to the donor
  • Vehicle Identification Number (VIN)
                                                         should not state a value. Donors can obtain
  • Certification that the sale of the car was an
                                                         assistance with vehicle values at the Kelly Blue Book
arms length transaction between unrelated parties
                                                         web site, www.kbb.com.
                                                              Chapter 6: Gift Acceptance Procedures            77


                              New Tax Rules for Donated Vehicles (continued)

  Note: Regardless of whether the donated car is                           For More Information
kept or sold by the organization, the donor must
                                                              Please note that in 2004 the IRS published two
attach the tax receipt/acknowledgment letter to
                                                            guides, Publication 4302, “A Charity’s Guide to Car
his federal income tax return (Form 1040 for
                                                            Donations,” and Publication 4303,“A Donor’s Guide
individuals).
                                                            to Car Donations.” These publications are out of
                     Penalties                              date – they only apply to vehicle donations made
                                                            prior to 2005. The IRS is currently working on
  Organizations that fail to furnish the required tax
                                                            updated versions of these publications, for posting
receipt, or knowingly provide a false or fraudulent
                                                            on their web site, www.irs.gov.
receipt, are subject to significant penalties, up to
35% of the sales price or fair market value of the
donated vehicle.




For sample Tax Letters, see Appendix pp. 117-118



          Susan Arvanitis, CPA is Province Controller for the Congregation of the Passion, Holy Cross
          Province, a men’s institute based in Chicago. Prior to joining the Congregation, she worked in the
          Chicago office of Deloitte & Touche LLP as a Tax Senior Manager. She has ten years of experience
          in public accounting providing tax consulting and compliance services to a variety of nonprofit
          organizations, and graduated with highest honors from University of Illinois at Urbana-Champaign
          with a bachelor’s degree in accounting and master’s degree in taxation.

				
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