Tag Archives: Restricted Gifts

Should You Accept ANY and EVERY Donation? Why you need a Gift Acceptance Policy

By David A. Mersky

A beloved member of the community died after a long illness. Her husband and her friends wanted to honor her memory with a fund that would sponsor professional development programs. They turned to the organization on whose board the deceased woman had served for many years and suggested that they would make a gift of $100,000 to start a named fund that would underwrite annual staff training programs.

The organization’s executive director was thrilled…until she learned that the gift came with restrictions. First, the grieving husband would manage the funds.  Also, he would have veto power on any programs undertaken in his late wife’s name. Further the friends said that they would like to run two annual fundraisers exclusively for the fund among the supporters of the organization.

Our client, the executive director politely said, “Thank you, but no thank you.” She told the donors that the plan was not in compliance with the organization’s Gift Acceptance Policy. She explained that the board had tasked the foundation committee who employed professional managers to invest the assets of the organization and no individual donor would be permitted to manage any part of gifted assets. Further, the program committee and staff decide what programs to provide.

The Gift Acceptance Policy made all this very clear.

And, if your organization does not have such a statement then you should begin to create one now.

Why do you need a Gift Acceptance Policy?

  • …so you will know how to respond no matter what unexpected gift is offered.
  • …a reason to pause before you say “yes” or “no, thank you.”
  • …time and space to evaluate any donation.
  • …if the gift acceptance policy says no to a type of donation, e.g., non-publicly traded securities, it saves time and cost of considering each gift on a case-by-case basis.
  • …so you can respond more quickly and more confidently.
  • …to tell donors that gift valuations for gifts of tangible property—and the cost for appraisals—are their responsibility

What should a Gift Acceptance Policy Contain

  • Introduction—the organization solicits and accepts gifts to fulfill mission
  • What are acceptable gifts and conditions?
    • Cash
    • Checks
    • Credit cards
    • Pledges
    • Publicly traded securities
  • Which gifts require Board approval upon due diligence
    • Closely held securities
    • Real estate
    • Life insurance
    • Tangible personal property
  • What kinds of planned gifts are acceptable?
    • Bequests
    • Charitable gift annuities
    • Deferred gift annuities
    • Charitable remainder trusts
    • Charitable lead trusts
    • Retained life estates
  • What are the minimums for named endowment funds?

Above all, as you draft your gift acceptance policy be sure to check with your lawyers and accountants. But, when you write the policy statement, be sure to maintain a friendly tone, avoid legalese, and negative language.

Hopefully, you will never have to decline a gift. With a gift acceptance policy, you will be prepared for any eventuality.

You might wonder if you could regret turning down a contribution. More importantly, with a gift acceptance policy, you will never regret accepting one, either.

If you would like a free, 30-minute consultation to speak about your Gift Acceptance Policy, or anything else, Click here to schedule a time with me.

Assessing Your Nonprofit’s Donors and Prospects: Annual Fund Segmentation Strategies

Annual fund segmentationSolicitation strategies start with assessing the current situation. Do you treat all your prospects and donors the same? Should you?

Now, more than ever, you should have a development plan for all prospects and a stewardship plan for all donors.

But, you should not plan on having the executive director “meet” with every donor. How can a nonprofit engage each prospect and donor when there are thousands? Annual fund segmentation.

Start annual fund segmentation by considering how they give.

  • Are they a Prospect or Donor
  • If a donor, are they
    • Current
    • Once-a-year Donor
    • Monthly Donor
    • Major donor
    • mid-level donor
    • mid-level donor you are trying to upgrade
    • 10-year donor
    • 25+ year donor
    • first time donor
    • LYBUNT
    • PYBUNT
    • Someone who gave to a
      • specific event
      • end-of-year mail or email campaign
      • other mail or email campaigns
      • sponsorship
      • special campaign donor
      • restricted gift donor
      • peer-to-peer campaign on behalf of a friend
      • also a volunteer
    • If a prospect or a donor, are they also a
      • Recent graduate or services beneficiary
      • 10-year alumnus\a
      • 25-year alumnus\a

Additional key points to keep in mind include:

  1. It costs 4.5 times as much for the nonprofit to find a new donor than retain one
  2. Donors don’t usually give a major gift in the first year they give to a nonprofit. Cultivation and stewardship over years (3-5 years minimum) is what will get you to the point you can ask for a major gift. *This assumes they have the capacity and had been stewarded properly during the time since they made their first gift.
  3. When you start accounting for lifetime giving, someone who gave $50/year for 20 years gave $1,000 to your nonprofit. How would you treat someone who gave $1,000?
  4. Break it down specifically for your organization. Should:
  • major donors get more personalized interaction than other donors?
  • monthly donors get a different appeal than once-a-year donors?
  • PYBUNTS or LYBUNTS get the same letter as new prospects?
  • members get the same email as non-members?
  • alumni get same event invitation as prospects?
  • parents get the same Facebook post as the students?
  • ____ get the same ____ as _____ (fill this in for your nonprofit)

Each organization will have its own set of segmentations.

And contrary to popular belief, segmentation was not created to give you more work.  Instead, it gives you more directed work. And a path to raising more money (which is the point, isn’t it?)

It may seem easier to send the same fundraising letter to the 1000+ people on your mailing list and move on.  But what are you moving on to? If you rely on your annual fund to support your organization, this must be a priority for your development team. Even if it is a team of one.