Most of us have heard the quote “one person’s junk is another’s treasure”. What is more problematic for charitable organizations, I find, is that donors give non-cash items that were valuable to them, but are not valuable to the organization or in support of its mission. If you haven’t implemented a gift acceptance policy, you may find yourself with items that cause more expense or liability than value.
So how do you avoid accepting a 100 pound statue of two cats or a time share in Flint, MI from one of your most generous donors with a value to them of $5,000 but a fair market value that is very difficult to determine? Simple – implement a gift acceptance policy.
I would assume if you accepted the aforementioned gifts, your entity could spend more time and incur more expenses trying to sell the items than what you would receive when they’re finally sold. The cost and resources needed to dispose of or sell non-cash donations should be a prime consideration in whether or not to accept the donation.
Other factors to note include review of legal considerations and potential liabilities, restrictions on the gift, gift acceptance approval procedures, necessary IRS filings, and carrying costs.
Implementing a gift acceptance policy will not only provide a clear direction for your employees, but will also be a good reference for your donors if you provide it as a link on your website. Check out these templates for a sample gift acceptance policy and other recommended policies.
By Samantha E. Mahlen, CPA