As the end of the year approaches, schools often find themselves receiving last-minute gifts and donations. While these contributions can be invaluable, it is important for schools to pause and carefully consider the risks and implications before accepting them.
Assessing the Type of Gift
First, schools should consider the type of gift individuals are offering. Cash or checks are straightforward and easy to process, but donations in-kind, such as property, equipment, or services, can be more complex. It is important to evaluate whether the gift aligns with the school’s needs and mission. For example, accepting outdated technology might be more of a burden than a benefit.
Donor Restrictions and Expectations
Last-minute donations can sometimes come with specific conditions. Donors may request that a school use the gift for a particular program, event, or purpose, which could place restrictions on how a school allocates the funds. Schools should be clear about their ability to honor these requests and consider how it aligns with their gift acceptance policy. A donation that requires significant administrative work or special treatment might be more of a burden than a benefit in the end.
Legal and Tax Considerations
Schools must ensure that donations comply with both state and federal laws. For example, if receiving a non-cash gift valued over $500, the donor is responsible for determining the value of that gift, and additional IRS forms may be required for donations exceeding $5,000. Schools should provide receipts for donations, including cash and non-cash gifts, with the donor’s name, donation amount or description, and a statement of whether the donor received any goods or services in exchange. Schools must provide receipts for any gifts that exceeds $250 in value.
Donor Recognition
Be mindful of the donor’s expectations for recognition. Clear communication about when and how recognition will occur is essential to maintaining a positive relationship with donors. It is also important for a School to consider how it may walk back a permanent recognition in the event the recognition is no longer in the best interests of the school’s reputation.
By keeping these considerations in mind, schools can effectively manage last-minute end of year donations while minimizing risk and ensuring the gift benefits both the donor and the school. Schools should have effective gift acceptance policies to guide these situations. If your School has any last minute gifts that raise red flags, reach out to trusted legal counsel before accepting.