Get Ready For Fundraising Season By Updating Your Gift Acceptance Policy

CATEGORY: Private Education Matters
CLIENT TYPE: Private Education
DATE: Mar 25, 2024

We are quickly approaching fundraising season, making it the perfect time to update or adopt a Gift Acceptance Policy!  A Gift Acceptance Policy sets forth, among other things, the types of gifts a school will accept freely, what types of gifts require additional consideration before accepting, and the types of gifts a school will not accept, all subject to various procedures outlined in the Policy.  Having a detailed and up-to-date Gift Acceptance Policy is considered a best-practice that can aid a school in accepting gifts that are mission aligned, avoid accepting gifts with costly administrative burdens, and spot common pitfalls associated with certain types of gifts.  When updating or adopting a Gift Acceptance Policy, here are some items to consider:

  1. Who is permitted to solicit gifts? A Gift Acceptance Policy should identify who may solicit funds on behalf of the school and under what circumstances.  For example, the policy may provide that certain employees or administrators should oversee and work with all parent fundraising efforts or any contracts with commercial fundraisers.  Indeed, any fundraising efforts or campaigns involving parent associations, should be overseen by or coordinated with the school and a Gift Acceptance Policy is a great place to outline the school and the association’s respective rights and obligations with respect to fundraising.
  1. Conflict of Interest. A Gift Acceptance Policy should identify a school’s policies with respect to conflicts of interest, such as any conflict of interest policies in the Employee Handbook or adopted by the Board, and explain how those policies apply to fundraising.
  1. Types of Gifts. Gifts do not always come in the form of unrestricted monetary donations.  Gifts can come in many unique or creative forms, such as real property, supplies, services, or securities.  Each different type of gift comes with its own unique set of challenges, and a well-written Gift Acceptance Policy will serve as a guide for identifying whether and under what conditions a school will accept various types of gifts.  For example, it is common to have a provision in a Gift Acceptance Policy that states only publically traded securities will be accepted, to avoid the burden, complexities, and risks of accepting a gift of an ownership share in a company that cannot be easily converted to cash.  As another example, real property can be very valuable, but very burdensome and come with substantial liabilities.  Accordingly, a Gift Acceptance Policy should state that gifts of real property will not be automatically accepted and that a school must first conduct diligence (with the aid of counsel and other appropriate consultants) into things like the environmental hazards, title, usefulness, marketability, and carrying costs.  Similarly, a Gift Acceptance Policy should state that restricted gifts will not automatically be accepted, without careful consideration by the School into issues, such as whether the restriction is consistent with a school’s values, overly burdensome (g., require specific programs be created without adequate funding), or could create undue legal risks.
  1. List of Circumstances When a School Will Not Accept a Gift. As noted above, there may be times when a school wishes to say no to a gift, and often a Gift Acceptance Policy will list specific circumstances when a school will not accept a gift  (e.g., the gifts could negatively impact the school’s tax-exempt status).  Having that kind of list in a well-written Gift Acceptance Policy can help a school preserve its relationship with a donor when the school must say no to a proposed gift and can help facilitate conversations with a donor about alternative ways to give.
  1. Naming and Recognition. One of the most important parts of a Gift Acceptance Policy, are the provisions setting forth the types of recognition a school may implement for different types of donors, including when a school will provide naming rights in exchange for a gift.  These sort of provisions can help a school explain in advance, why the school will require in a gift agreement or pledge agreement certain rights to modify, remove, or provide alternative naming options, which helps preserve a school’s ability to remove a name in the event that continued association between the name and the school is no longer in the school’s best interests. 

The above list is not exhaustive, but should provide you with a jumping off point in reviewing or preparing your school’s Gift Acceptance Policy.  LCW is also available to help with advice on Gift Acceptance Policies, including helping tailor your policy to the unique needs and experiences of your school, as you prepare for the fundraising season.

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