Sample Gift Acceptance Policy

Transcription

1 Sample Gift Acceptance Policy In order to protect the interests of ABC Charity and the persons and other entities who support its programs, these policies are designed to assure that all gifts to, or for the use of, ABC Charity are structured to provide maximum benefits to all parties. The goal is to encourage funding of ABC Charity without encumbering the organization with gifts which may prove to generate more cost than benefit, or which are restricted in a manner which is not in keeping with the mission of ABC Charity. It is understood that except where stated otherwise, these policies are intended as guidelines, and that flexibility must be maintained since some gift situations can be complex, and decisions only made after careful consideration of a number of interrelated factors. Therefore, these policies will in some instances require that a gift acceptance committee considers the merits of a particular gift and a final decision be made only by that body. NOTE: Create Gift Acceptance Committee Appropriate inquiry shall be made and special consideration shall be given to the nature of any gift property and whether it is in keeping with the mission of ABC Charity prior to its acceptance. I. Outright Gifts A. Cash l. Gifts in the form of cash and checks shall be accepted, unless as in the case of all gifts, there is a question as to whether the donor has sufficient title to the assets or is mentally competent to legally transfer the funds as a gift to ABC Charity. 2. All checks should be made payable to ABC Charity and shall in no event be made payable to an employee, agent, or volunteer for the credit of ABC Charity. B. Publicly Traded Securities 1. Securities which are traded on the New York, American Stock Exchanges, NASDAQ or other readily marketable securities, shall be accepted by ABC Charity. It may be anticipated that such securities will be immediately sold by ABC Charity except in extreme cases. In no event shall an employee or volunteer working on behalf of ABC Charity commit to a donor that a particular security will be held by ABC Charity.

2 C. Closely Held Securities 1. Non-publicly traded securities may only be accepted after approval of the gift acceptance committee or its designee. 2. Such securities may be subsequently disposed of only with the approval of the gift acceptance committee. 3. No commitments shall be made for the repurchase of such securities from ABC Charity prior to completion of a gift of securities. NOTE: Gifts of Closely Held Securities require an appraisal by a business valuation expert if the value is above $10,000. D. Real Property 1. No gift of real estate shall be accepted without prior approval of the gift acceptance committee of ABC Charity or its designee. NOTE: Acceptance of real estate by a charity whereby the charity becomes part of the chain of ownership, opens the charity to environmental claims. Use of a trust with the donor serving as trustee through the sale of the property, prevents the charity from bearing any environmental liability since title will never pass to the charity. 2. Due diligence concerning environmental concerns shall be considered before accepting any gift of real estate. This may involve conducting an environmental audit of the property. 3. Costs associated with the acceptance of a gift of real estate will be negotiated between the donor and ABC Charity. In general, ABC Charity will bear the following costs and responsibilities: Phase I Environmental Inspection (approximately $3,000 photo, visit) Initial engineering inspection Title search Qualified appraisal ordered by ABC Charity for its own purposes Legal fees incurred by ABC Charity for its own purposes In the case of outright gifts or bargain sales (receipt of income stream in exchange for RE gift), any costs incurred for taxes, management and sale of the property from the date of transfer to ABC Charity. Travel expenses In general, the donor will bear the following costs: Phase II environmental inspection (if required), unless the net value of the property justifies ABC Charity bearing the cost (approximately $10,000 - $15,000 soil and water samples)

3 Engineering re-inspection (if required), unless the net value of the property justifies ABC Charity bearing the cost Any environmental or engineering repairs A qualified independent appraisal for income tax purposes Satisfaction of all liens and encumbrances prior to transfer of the property Legal fees incurred for the donor s purposes. All costs, including, but not limited to, transfer taxes, property taxes, and closing costs that would normally be borne by the seller. 4. No gift of real estate shall be accepted without first being appraised by a party chosen by ABC Charity who shall have no business or other relationship to the donor. 5. In general, residential real estate located within the continental United States, with a value estimated by the donor or others at $100,000 or greater will be accepted, unless the gift acceptance committee shall determine that the property is not suitable for acceptance as a gift, or the committee chooses to make an exception in a specific case. 6. In general, residential real estate located outside of the continental United States will not be accepted as a gift. The gift acceptance committee may make exceptions to this policy if conditions warrant. 7. Real estate shall not be accepted to fund a charitable gift annuity without seeking an opinion as to the permissibility of this action under the current laws of the state of Pennsylvania and approval by the gift acceptance committee. 8. In general, the donor must have 100% ownership and the property must be unencumbered. Special attention shall be given to the receipt of real estate encumbered by a mortgage, as the ownership of such property may give rise to unrelated business income for ABC Charity, and disqualification of certain split interest gifts unless handled in a proper manner. In the case of a bargain sale for a charitable gift annuity or charitable remainder unitrust, current regulations require that a donor must have owned the property for at least 5 years, any mortgage on the property must be greater than 5 years of age and the charity must sell the property in less than 10 years. 9. Bargain sales will be considered on a case by case basis. If the property is encumbered, the Charity will not enter into a bargain sale unless the sale portion of the transaction can retire the debt. 10. The gift acceptance committee is empowered to make exceptions on a case by case basis. E. Tangible Personal Property 1. No personal property shall be accepted by ABC Charity unless there is reason to believe the property can be quickly liquidated by sale. No personal property shall be accepted that obligates ABC Charity to ownership of it in perpetuity. No perishable property or property which will require special facilities or security to properly

4 safeguard will be accepted without prior approval of the gift acceptance committee or its designee. 2. Jewelry, artwork, collections, and other personal property shall not be accepted unless the employee, agent, or volunteer working on behalf of ABC Charity shall have reason to believe the property has a value in excess of $????. Such property can only be accepted by the gift acceptance committee or its designee. 3. Notwithstanding the foregoing, if there is reason to believe personal property has a value of $5,000 or more, it may only be accepted after receipt and review by the gift acceptance committee or those empowered to act on its behalf, of an appraisal qualified under terms of the internal revenue code governing gifts of property of this type. Appraisal expenses will be borne by the prospective donor. 4. Only the gift acceptance committee or its designee may represent to a donor that property will or will not be held by ABC Charity for a specific period of time or for purposes related to its tax-exempt status. Donors should be notified at the time of receipt of a gift that ABC Charity will, as a matter of corporate policy, cooperate fully in all matters related to IRS investigations of non-cash charitable gifts. NOTE: Extra IRS scrutiny results from gifts of tangible personal property. An appraisal is required for value above $5000 with the appraisal performed by an acknowledged expert in that area who has formal education demonstrating such knowledge. 5. Items donated for special events, to be consumed or used for prizes or auctions shall generally be exempt from this section. F. Other Property 1. Other property of any description including mortgages, notes, copyrights, royalties, easements, whether real or personal, shall only be accepted by action of the gift acceptance committee or its designee. G. IRA Rollover Gift 1. The Pension Protection Act of 2006, signed into law on August 17, 2006, allow for up to, and including, $100,000 from an individual s (age 70 ½ and above) IRA may be rolled over directly to charity through Dec. 31, By directly gifting a portion of the IRA funds, which can qualify as the RMD, these funds do not increase income tax since they bypass the adjusted gross income.

5 II. Deferred Gifts A. Bequests 1. Gifts through wills and trusts shall be actively encouraged by ABC Charity. 2. In the event of inquiry by a prospective donor, representations as to the future acceptability of property proposed to be left to ABC Charity in a will or through any other deferred gift arrangement shall only be made in accordance with the terms and provisions of paragraphs I (A-F) of this document. 3. Gifts from the estates of deceased donors consisting of property which is not acceptable, shall be rejected only by action of the gift acceptance committee. ABC Charity s gift acceptance committee or its designee shall expeditiously communicate the decision of the gift acceptance committee to the legal representatives of the estate. If there is any indication that the representatives of the estate or any family member of the deceased is dissatisfied with the decision of the gift acceptance committee, this fact shall be communicated to the gift acceptance committee or to the Executive Director as quickly as possible. 4. Attempts shall be made to discover bequest expectancies wherever possible in order to reveal situations that might lead to unpleasant donor relations in the future. Where possible, intended bequests of property other than cash or marketable securities should be brought to the attention of the gift acceptance committee and every attempt be made to encourage the donor involved to conform his or her plans to ABC Charity policy. B. Charitable Remainder Trusts In general, ABC Charity will not serve as trustee of a charitable remainder trust for the benefit of the organization. This policy may only be waived by a written resolution of the Charity s Board. C. Charitable Lead Trusts In general, ABC Charity will not serve as trustee of a charitable lead trust for the benefit of the organization. This policy may only be waived by a written resolution of the Charity s Board. D. Charitable Gift Annuities 1. No contract for an immediate payment gift annuity shall be entered into which names an income beneficiary under 65 years of age. 2. In keeping with the Internal Revenue Service code, there shall not be more than two income beneficiaries for each gift annuity. 3. The minimum initial contribution for a gift annuity shall be $5,000.

6 E. Life Estate Gifts 1. Donors may make qualified gifts of real property to ABC Charity under which they maintain a life interest in the property. Personal residences and farms qualify for favorable tax treatment for this type of gift. 2. Such gifts are subject to approval of the gift acceptance committee in the situation where the asset involved appears to be a minor portion of the donor s wealth, and the committee is satisfied that there has been full disclosure to the donor of the possible future ramifications of the transaction. F. Gifts of Life Insurance 1. In general, ABC Charity will only accept paid up policies with ABC Charity named as beneficiary. 2. ABC Charity will encourage donors to name ABC Charity to receive all or a portion of the benefits of life insurance policies which they have purchased on their lives. 3. ABC Charity will not, however, as a matter of course agree to accept gifts from donors for the purpose of purchasing life insurance on the donor s life. Exceptions to this policy will be made only after researching relevant state laws to assure that ABC Charity has an insurable interest under applicable state law. 4. No insurance products may be endorsed for use in funding gifts to ABC Charity without board approval. 5. In no event shall lists of ABC Charity s donors be furnished to anyone for the purpose of marketing life insurance for the benefit of donors and/or ABC Charity. This policy is based on the fact that this practice represents a potential conflict of interest, may cause donor relations problems, and may subject ABC Charity to state insurance regulation should the activity be construed as involvement in the marketing of life insurance. III. Payment of Fees Related to Gifts A. Professional Fees 1. ABC Charity will pay reasonable fees for professional services rendered in connection with the completion of a gift to ABC Charity. Such fees will be paid only with prior written approval of the gift acceptance committee and will be netted out of gift proceeds. 2. Fees shall be reasonable, and directly related to the completion of a gift. They shall be limited to appraisal fees by persons who are competent and qualified to appraise the property involved and who have no conflict of interest, legal fees for the preparation of documents, accounting fees incident to the transaction, and fees of fee for service financial planners. In the case of financial planners, such persons must affirm in writing that they are compensated only through fees for services

7 rendered and that they are not compensated for the sale of products to clients. This distinction is vital in avoiding the payment of commissions, which could trigger securities regulation. 3. In the case of legal, accounting and other professional fees, an attempt shall be made by the gift acceptance committee to ascertain the reasonableness of these fees prior to payment. An hourly breakdown of time should be requested. In cases, which appear excessive, the summary of fees shall be submitted to ABC Charity s attorney for review and approval prior to payment. 4. In cases where the persons receiving fees were initially employed by the donor and ABC Charity is asked to pay the fees involved, the donor shall be notified that the payment of such fees may result in taxable income to the donor in the amount of the fees paid. 5. In situations where advisors retained by ABC Charity prepare documents or render advice in any form to ABC Charity and/or a donor to ABC Charity, it shall be disclosed to the donor that the professional involved is in the employ of ABC Charity and is not acting on behalf of the donor and that any documents or other advice rendered in the course of the relationship between ABC Charity and the donor should be reviewed by counsel for the donor prior to completion of the gift. V. Gift Acceptance Committee ABC Charity s Gift Acceptance Committee shall be comprised of the Executive Director and two members of the Board. The Gift Acceptance Committee shall report on its activity to the full Board. VI. Use of Legal Counsel ABC Charity should seek the advice of legal counsel in matters relating to acceptance of gifts when appropriate. Review by counsel is recommended for: 1. Closely held stock transfers that are subject to restrictions or buy-sell agreements. 2. Documents naming ABC Charity as Trustee (not recommended). 3. Gifts involving contracts, such as bargain sales or other documents requiring the ABC Charity to assume an obligation. 4. Transactions with potential conflict of interest that may involve IRS sanctions. 5. Other instances in which use of counsel is deemed appropriate by the Gift Acceptance Committee.