Charitable Gift Acceptance Policies

One of the real benefits to being a tax-exempt charitable organization is the ability to receive tax-deductible contributions from individuals, estates, trusts, corporations, partnerships, and foundations. It is not necessarily in the best interest of the organization to accept every proffered gift, however.

Some gifts may put the organization at risk (gifts of partnership interests or working interests in minerals, for example). Some gifts may subject the organization to tax on unrelated business income, or excise taxes for prohibited transactions with disqualified persons, investments that jeopardize the organization's charitable purpose, or excess business holdings. Other potential gifts (real estate, for example) may subject the organization to risk for environmental costs, may involve personal benefit contracts, or otherwise be more advantageous to the donor than to the organization.

Charitable organizations need clear, enforceable gift acceptance policies. Officers and employees should be given authority to accept certain types of gifts (cash, publicly traded stock) with little involvement by the board. Other types of gifts should require board approval under the provisions of the gift acceptance policies. The policies should be reviewed with legal and tax counsel periodically to ensure the policies continue to represent "best practices."

We have helped our clients draft, implement, administer, review, and revise appropriate gift acceptance policies. We believe that charitable contributions should enhance functioning of charitable organizations, not put its tax-exempt status at risk.

©2008 Ronnie C. McClure, PhD, CPA