How Nonprofit Gift Acceptance Policies Handle Unusual Donations

By Kalie VanDewater

Imagine someone wants to donate a huge gift, potentially one of the largest your nonprofit has ever received. However, you’re not entirely sure how to accept it. You take it to the decision-makers in your nonprofit, and they, too, are conflicted about how to address the gift.

This is where having a gift acceptance policy is critical.

“The gift acceptance policy is set up to make sure that the organization is protected,” Rick Cohen, chief communications officer and chief operating officer at the National Council of Nonprofits, said. “It's a lot easier if there is a question about accepting a particular gift, you can go back to that policy and say, ‘Yes, this is OK.’ ‘No, this is not OK.’”

A gift acceptance policy can also help your organization build relationships with its donor base, Emily Fascilla, director of client strategy at The Giving Block, said.

“Typically, gift acceptance policies can help describe the types of gifts that an organization will and won't accept, which can be a key component of good stewardship practices and setting donor expectations,” she said. “It can also detail how the gift should be recognized or tracked or handled. So this can be, again, very helpful for that stewardship component and transparency with your donor.”

Here are some insights into creating a gift acceptance policy that supports your nonprofit’s mission.

Gift Acceptance Policy Basics

To make sure your policy is thorough, you should plan a brainstorming session with key stakeholders such as board members.

“When I work with boards to facilitate a conversation around creating a gift acceptance policy, we try to have fun with it,” Hannah Berger, president of The Philanthropy Coach, said. “We come up with the craziest scenarios possible and then map out what it would look like to deal with something like that.”

While a detailed policy is key, there’s no way you’ll be able to cover everything. So, Berger recommended including a sentence in your policy indicating the board has the final say on gifts outside of the policy. This allows your organization to adapt as needed.

“Most gift acceptance policies are pretty loose and flexible to make it as easy as possible to accept whatever contributions people want to make to the organization,” Cohen said. “It's just making sure that they're protecting the mission of the organization at the same time.”

Cryptocurrency Donations

In recent years, cryptocurrency has grown as a donation type. But, according to Fascilla, many nonprofits aren’t sure how to categorize them.

“One of the easiest ways, if you're a nonprofit professional trying to create a gift acceptance policy for crypto, is to understand that the IRS recognizes crypto exactly the same as stock,” Fascilla said. “If you have a stock gift acceptance policy and language around how you handle large stock gifts, it can translate very well. In terms of your tax benefits language, you can even replace the word ‘stock’ with ‘crypto,’ and it often will translate exactly.”

She advised that your organization should always work with an accountant or adviser to finalize your policy.

Fascilla said 60% of cryptocurrency donations are anonymous, so remember to address anonymous gifts in your policy as well.

“We have heard many horror stories from nonprofits … letting us know that they had to turn down gifts of $1 million or $2 million in bitcoin or another type of cryptocurrency, because they did not have their gift acceptance policy in place, their board was uncomfortable with a gift of that size coming to them in crypto or they had questions around accepting anonymous gifts,” Fascilla said.

Nonprofits often indicate in their policies that these types of gifts should be immediately liquidated to retain the full value that the donor gave, Cohen said. However, some nonprofits may elect to hold onto cryptocurrency or other investment donations like stock and include them in their portfolios. It depends on whether you want and are able to manage an additional account.

If nonprofits are unsure about accepting cryptocurrency donations, Cohen said they don’t have to necessarily advertise whether they accept them.

“For most organizations, if they don't accept crypto, rather than saying on their site, ‘We don't accept it,’ they just won't have instructions on how to contribute,” he said. “… In most cases it isn't that they don't want it, it's that they haven't done it before, or maybe they'll take it, but they're not excited to take it.”

Physical Asset Gifts

Sometimes, donors will want to give a high-value asset to your nonprofit, but you have to consider whether the fees of processing the donation will be worth it.

Berger recalled a time the board of directors at an organization she worked at accepted a piece of artwork from a high-net-worth donor they wanted to steward. However, the resources used to appraise and sell the piece did not end up supporting the organization’s mission.

“I think at the end of the day, the organization might have netted like $1,500 on a piece of art that was likely worth $10,000 to $20,000 per the donor,” Berger said.

Another asset donors may want to give to nonprofits is real estate. For example, Berger said one of her nonprofit clients was offered a gift of real estate from an out-of-state donor who was a close friend of a key board member. The board was divided. While some members wanted to accept the multimillion-dollar building, the rest of the board was hesitant because they didn’t know how much money would be sunk into assessing and selling the building, and if the sale would create additional tax concerns for the organization.

“If they had had [in their acceptance policy] how they take those gifts and how they process them, what the stipulations are, what the boundaries are that they're working within, that conversation wouldn't have required bringing an outside consultant,” she said. “It wouldn't have taken months of their time when they could have been focused on expanding their services and fulfilling their mission.”

Tailoring Your Acceptance Policy to Your Org

As mentioned previously, you may not be able to include every possible donation in your acceptance policy. Aside from unexpected donations, the giving landscape continues to evolve; bitcoin, considered the first cryptocurrency, for instance, wasn’t invented until 2009. To keep up with changes, Berger recommended setting time aside annually to update your policy.

Additionally, Cohen said that some nonprofits may forget one crucial piece of their policy: who to talk to when a gift is questioned.

“You sometimes run into a problem where the board wishes that they were consulted on something, but the policy never said that the board needed to be consulted, so staff made the decision,” he said. “... That process piece is helpful for when there's any question on things, so if the board wants to be involved, the board's involved. If the board says, ‘We've delegated this decision-making authority to the executive director,’ then that should be in there, too.”

Even though they may sound “cumbersome or dull,” acceptance policies are essential for achieving your organization’s mission, Berger said.

“Your policies are a reflection of both your mission and your organization values,” Berger said. “So: ‘What do our values look like in action? Let's codify that.’ … When I talk to my clients that don't have them in place yet, that's how I drive home the importance of having them.”