Gift Acceptance Policies and Procedures Table of Contents

Transcription

1 Gift Acceptance Policies and Procedures Table of Contents 1.0 Overview 1.1 Definitions 1.2 General Guidelines for Management and Reporting 1.3 Conformity to National Reporting Standards 1.4 Campaign Gift Counting 1.5 Code of Ethical Principles and Standards of Professional Practice 1.6 Responsibility to Donors 1.7 Gifts With Immediate Utility 1.8 Gifts With Liquidity 1.9 Threshold Amounts for Gift Acceptance 1.10 The Recording of a Gift 1.11 Valuation of Gifts 1.12 Conflicts of Interest 1.13 The Gift Acceptance Review Process 2.0 Guidelines for Specific Types of Gifts 2.1 Outright Gifts 2.2 Pledges 2.3 Gifts of Foreign Currency 2.4 Gifts Via Wire or Electronic Fund Transfers 2.5 Revocable Deferred Gifts 2.6 Gifts of Life Insurance Policies 2.7 Gifts of Publicly Traded Stock and Securities 2.8 Gifts of Closely Held Business Interests 2.9 Gifts of Real Property (Real Estate) 2.10 Bargain Sales 2.11 Gifts of Remainder Interests in Real Property 2.12 Gifts of Tangible Personal Property 2.13 Loans of Tangible Personal Property 2.14 Gifts of Farm Equipment 2.15 Gifts of Services 2.16 Gifts of Other Assets 2.17 Gifts Related to Events 2.18 Gifts of Non-Monetary Items 2.19 Matching Gifts 2.20 Life Income Gifts - Gift Annuities & Remainder Trusts 2.21 Charitable Lead Trusts 2.22 Gifts of Oil, Gas, and Mineral Rights 2.23 Special Circumstances 2.24 Non-Government Grants and Contracts 3.0 Endowed Funds - General Policy 3.1 Endowment Minimum Gift Amounts 3.2 Naming Opportunities 4.0 Effective Date and Amendments 4.1 Effective Date of Policy 4.2 Authority to Make Technical Amendments 4.3 Periodic Review & Revision 5.0 Appendices

2 (Our Charity) Gift Acceptance Policies & Procedures 1.0 Overview. This Statement of Policies & Procedures provides a comprehensive framework for administering the process of accepting gifts presented by prospective donors to (our charity) The policies and guidelines set forth regarding the acceptance of gifts are intended to define the considerations and processes through which (our charity) assesses the financial desirability of receiving assets as a gift from a prospective donor, and determine whether to accept a gift as offered. The key goal of these policies is to determine whether a proposed gift would be consistent with (our charity s) mission and strategic goals. As a general rule, proposed gifts that are offered for purposes inconsistent with (our charity s) mission will be refused. Further, proposed gifts with restrictions that violate (our charity s) ethical standards in any way will not be accepted. Once a determination is made that a proposed gift is consistent with (our charity s) mission, standards, and strategic goals, the focus of the gift acceptance criteria moves to a consideration of the property's immediate utility and/or its liquidity. A proposed gift should be either useful to (our charity) in the form offered, or easily converted to cash. (our charity) reserves the right to decline gifts which have no immediate utility, from which little or no financial gain may be realized, or which may be accompanied by significant financial or other burdens prior to liquidation. 1.1 Definitions A gift or contribution is an unconditional transfer of cash or other assets to (our charity), or cancellation of a liability to (our charity). An externally sponsored agreement, or grant, is an agreement for which a Principal Investigator or Project Director is responsible. It is funded by an entity outside of (our charity), centered around an organized activity or project, and intended to produce a specific research, instructional, or public service outcome. 1.2 General Guidelines for Management and Reporting (specified office) will receive all gifts to (our charity). Upon receipt, the terms, restrictions and conditions of the gift will be recorded. (specified office) will deposit gifts to designations specified by donors and will coordinate appropriate acknowledgment of the gift and message(s) of gratitude to all donors in a timely manner. Pledges will be recorded, and (specified office) will maintain a pledge payment reminder system. In the event that (specified office) mistakenly receives a payment on an externally sponsored agreement, such payment should be deposited with (specified office) and a copy of the receipt and documentation should be sent to the (specified office) for externally sponsored agreements. Total fundraising at (our charity) will be the sum of all new pledge commitments documented in the reporting period and all new cash/cash equivalent gifts received by (our charity) in the same period. The amount of actual gifts received will be reported separately and will be the sum of all cash/cash equivalents received in the reporting period, including payments on pledges. Verbal pledges or commitments will not be counted in gift totals under any circumstances. Income from ticket-based operations, contract revenues and investment earnings is excluded from gift income. Net proceeds from special events benefiting (our charity s) programs will constitute gift income. 1.3 Conformity to National Reporting Standards 1

3 The standards of accounting and reporting established by (appropriate governing organization/body), will govern the management and reporting of gifts to (our charity). 1.4 Campaign Gift Counting When (our charity) launches a comprehensive fundraising campaign, (specified office) will be responsible for implementing all campaign-specific policies and procedures for campaign gift accounting and reporting established by (specified office or governing body). These policies and procedures may differ from gift policies and procedures stated elsewhere, e.g., campaign gifts may include charitable commitments from donors that are not counted as assets of (our charity) under FASB accounting standards. 1.5 Code of Ethical Principles and Standards of Professional Practice All Development staff at (our charity) will abide by the Association of Fundraising Professionals Code of Ethical Principles and Standards of Professional Practice, as amended from time to time (adopted in 1964; amended October 1999). 1.6 Responsibility to Donors (our charity) considers its donors to be a highly valued constituency. All officials should treat donors with the utmost respect and professionalism. (our charity) will honor donors wishes for designating the use of their gifts for any legitimate and approved program within (our charity). All donors will be acknowledged and thanked for their gifts in writing within a reasonable period of time. All representatives of (our charity) will use their best judgment to help donors make informed gift decisions. Each representative should be knowledgeable about gifts and should disclose to the donor advantages and disadvantages that could reasonably influence the decision of the donor to make a gift to (our charity). In particular, planned gift items subject to variability (such as market value and income payments) should be discussed fully. (our charity) will not knowingly accept a gift that is contrary to the donor s best interests. (our charity) will honor the requests of donors who wish to remain anonymous. All information that (our charity) has gathered on its donors, prospects and alumni will be held and maintained by (our charity) in strict confidence. Files will be made available whenever required by law. 1.7 Gifts With Immediate Utility. Gifts of property that are likely to have immediate utility to (our charity) for its programmatic, administrative or service activities include, but are not limited to: Real property located close or contiguous to (our charity) campus or other facilities. Property of scholarly interest such as papers, books, manuscripts or archival materials. Information and data processing systems, hardware, or software. Films and video tapes. Items of fine art. Donated services. Gifts of educational, scholarly, scientific or operating supplies. Equipment such as information and data processing systems, computer hardware or software, business machines, scientific equipment, athletic equipment, or other equipment useful in the dayto-day operations of (our charity). 1.8 Gifts With Liquidity. Among the types of property that may be offered as gifts, it is likely that most gifts will be offered in the form of liquid assets (e.g., cash, checks, marketable securities). When liquid assets are offered, it is 2

4 anticipated that the gift will be accepted routinely - so long as the purpose of the gift is appropriate to (our charity)'s mission, goals, and standards. On the other hand, gifts of non-liquid assets and other kinds of property (e.g., real estate, tangible personal property, closely held business assets) are likely to be subjected to scrutiny under the gift acceptance process, chiefly due to the likelihood of significant administrative or liquidation costs. 1.9 Threshold Amounts for Gift Acceptance. With an appreciation that the time and effort needed to accept and administer gifts may ultimately diminish the financial gain realized from a gift, the following guidelines are offered regarding minimum gift threshold levels, to ensure that every gift makes a valuable contribution to (our charity). In all cases, (our charity) reserves the right to revise such guidelines from time to time and to consider specific proposed gifts as exceptions to the stated thresholds if the circumstances merit such consideration. The minimum threshold levels for certain types of gifts include: Tangible Personal Property: no minimum; considered on a case-by case basis Real Estate: $ minimum, with exceptions considered on a case-by case basis Life Insurance: no minimum; considered on a case-by case basis, with special consideration given to any outstanding premium payment requirements that might affect (our charity) Planned Gifts, if (our charity) is to serve as trustee: o Charitable Remainder Trusts:, $ minimum, and (our charity) is designated to receive at least % of remainder. (Examination of other charitable remaindermen should be conducted before a final decision, to ensure those charities are acceptable for (specified office s) management of the trust); no minimum amount required if the donor uses another trustee, but the donor is encouraged to name (our charity) as an irrevocable remainderman. o Charitable Gift Annuities: $ for an initial annuity; $ minimum for any subsequent annuity from the same donor. o Charitable Lead Trusts: Considered on a case-by-case basis. o Pooled Income Fund(s): $ minimum 1.10 The Recording of a Gift. Before a gift may be recorded by (specified office), it must be accepted and received. (specified office) will designate the individual to advise the donor regarding the outcome of the gift acceptance review process. Once the donor has been notified that a proposed gift has been accepted, that (our charity) has taken possession of the proposed assets, and all appropriate documentation has been executed, the gift may be recorded as received Valuation of Gifts. While the valuation of proposed gifts is a distinct process, it is likely that these policies and practices will intersect with the valuation process from time to time. For this reason, this brief summary of gift valuation is provided. There are five perspectives from which to review gift valuation. The valuation of gift property for purposes of federal and/or state government tax laws and regulations. The U.S. Internal Revenue Code sets forth specific rules and procedures regarding the valuation of gift property. The valuation of gift property for purposes of (our charity) s financial and accounting records. The Financial Accounting Standards Board sets forth rules and accounting standards governing the valuation of gift property. The valuation of gift property for purposes of donor recognition. The policies and guidelines of (specified office) govern the valuation of gifs for recognition. The valuation of gift property relative to (our charity) s fund raising goals, whether on a fiscal year basis and/or tied to any specific fund raising campaign effort. 3

5 The valuation of gift property for purposes of attributing gifts to fund raising staff who secured them, to support their performance evaluation. To count gifts of life insurance relative to (our charity) s financial and accounting records, (specified office) or (our charity) must be the owner and irrevocable beneficiary of the policies. The following valuation guidelines apply to gifts of life insurance: Paid-up Life Insurance Policies: Paid-up life insurance policies will be valued and recorded at their appraised value, and reported as a current outright gift. If the donor intends to make corresponding gifts to compensate for premium payments, those gifts should be recorded as pledges for that amount. At the end of each pledge period, that agreement should be renewed. New Policies: A pledge of premium payments for a new policy over a -year pledge period will be counted at the aggregate of the projected premiums over such -year pledge period at full value Realized Death Benefits: The insurance company s cash settlement amount for an insurance policy whose death benefit is realized during the (campaign/pledge) period, whether the policy is owned by (our charity) or not, will be counted in fundraising totals, provided no gift amounts in connection with said policy (fair market value of gifted policy or cash premiums received) were previously counted in fundraising totals. To the extent any market value or premium amounts were previously counted in a given fundraising period, appropriate adjustments will be made so that only the excess of the settlement amount over the previously counted amounts will be counted. Wholly Charitable Trusts Administered Outside (our charity): In the case of a wholly charitable trust administered outside of (our charity, the fair market value of the trust assets, or such portion thereof, representing (our charity)'s irrevocable income interest therein shall be credited as a current gift in the year in which the trust is established Conflicts of Interest. No agreement will be made between (specified office) and any agency, person, company or organization on any matter - whether for investment, management or other services - which knowingly would adversely affect the donor's interest. That is, no program, trust, contract or commitment will be urged upon any donor or prospective donor which would benefit (our charity) at the expense of the donor's interest The Gift Acceptance Review Process. The purpose of the Gift Acceptance Review Process is to ensure that any offered gift that may cause undue liability or a conflict of interest with the mission and values of (our charity) is thoroughly reviewed prior to acceptance by (specified office) on behalf of (our charity). (specified office) will oversee and manage the Gift Acceptance Review Process for each offered gift that meets the minimum threshold amounts stated in these policies, or that otherwise invites such due diligence as suggested through the guidelines in these policies. (specified office or governing body) holds the responsibility for final approval of any gifts which lie within these policies bounds. However, to streamline the approval process, the (governing body) authorizes (specified office) to act as coordinator of gift agreements. Any officer of (our charity) with a gift opportunity or working with an estate must present the relevant materials to the (specified office), who will arrange for review before final approval. 2.0 Guidelines for Specific Types of gifts. The following guidelines regarding specific types of gifts will be used in the administration of these gift acceptance policies. 4

6 2.1 Outright Gifts. Outright gifts via U.S. currency, checks, wire transfers, electronic transfer debits, credit card, or payroll deduction are likely to pose no difficulty for gift acceptance. To ensure compliance with the donor's wishes and prompt processing, outright gifts should be closely examined to identify any written statement of purpose, including (our charity) unit for which the gift is intended, if any; any restrictions; and, the expiration of the restrictions, if any. Checks should be made payable to (our charity) and should be accompanied by written instructions from the donor for any desired designation of the gift. 2.2 Pledges. A pledge is defined as a "Promise to Give" under F.A.S.B In essence, a pledge will be acceptable if there is a clearly evident donative intent and a reasonable basis for determining whether payments on the pledge are likely to be made in a timely manner. A pledge will be recorded in accordance with relevant F.A.S.B. rules and regulations and in keeping with the policies and procedures of (specified office). Pledge commitments must be written and must include the amount of the pledge, the pledge period, the date of the first payment, the frequency of payments, and the donor s signature. In addition, the written pledge must contain a statement of any gift designation, purpose and any restrictions. With very few exceptions, every effort should be made to keep pledge periods to years or less. Proposed pledges for a period longer than years would be beyond the normal practice of (our charity) and, as such, will be subject to the Gift Acceptance Review Process. 2.3 Gifts of Foreign Currency. Gifts made in foreign currencies will be valued at the US dollar equivalent on the date the gift or pledge payment is received. This value is determined by the daily currency conversion rates listed in the Wall Street Journal. The (specified office) is responsible for currency conversion transactions, and for determining of the U.S. dollar amount of the gift. The transaction fees resulting from converting foreign currency to U.S. dollars will be charged against investment revenue generally, in accordance with the policies of (our charity), to ensure that the full amount of the gift is applied to the purpose selected by the donor. 2.4 Gifts Via Wire or Electronic Fund Transfers. Gifts should be wired or electronically transferred in U.S. currency. If not, the (specified office) will convert such gifts to dollars, as provided above. Donors wishing to make a gift by a wire or electronic fund transfer should be instructed to follow (specified office s) instructions for such transfer, available from the (specified office) either by mail or fax upon request. If the donor's transfer form does not include an indication of the purpose of the gift, the development officer will make every effort to contact the donor to determine such purpose, and will forward that information to the (specified office). If possible, the development officer responsible for the gift will promptly notify the (specified office/s) and, in turn, any other appropriate parties, to ensure that the gift is associated with the correct donor. 5

7 Fees resulting from wire or electronic fund transfers will be charged against investment revenue generally, in accordance with the policies of the (specified office), to ensure that the full amount of the gift is applied to the purpose selected by the donor. 2.5 Revocable Deferred Gifts Although the value of a gift that is deferred and/or revocable may not be acknowledged under certain circumstances (see Sec 1.11: Valuation of Gifts), there is much to be gained by securing appropriate documentation of such gifts and by recognizing their value for certain internal purposes. Revocable deferred gifts include such instruments as: Bequests in wills or revocable living trusts Beneficiary designations in life insurance policies Beneficiary designations in retirement plans Charitable remainder trusts in which the donor reserves the right to change the charitable beneficiary. No deferred gift (except for deferred gift annuities) shall be accepted in which the value of (our charity)'s remainder interest is less than % of value of the assets transferred. (This should be consistent with Section 1.9 Thresholds, specifically re: charitable remainder trusts, etc) The benefits to (our charity) of documenting and valuing revocable deferred gifts include: Knowledge of the donor s future intent and designations, to ensure they are consistent with (our charity) s mission and policies; the opportunity to invite completion of a Gift Agreement if deemed appropriate or desirable Ability to project future cash flow based on evaluation of gift expectancy tables that include mortality tables and estimated face or future values of such gifts Ability to identify and appropriately steward donors of such gifts through (our charity) (appropriate deferred gifts recognition program) Ability to count revocable deferred gifts toward (our charity) s fund raising goals (our charity) requires the following documentation in order to formally recognize a revocable deferred gift, and to acknowledge the Donor through (our charity s) (appropriate deferred gifts recognition program): Completion of a (appropriate form), if the gift is designated for some specific purpose Receipt of pertinent pages from the document establishing the gift: the specific page that contains the instructions to make the gift, and the signature page from that document 2.6 Gifts of Life Insurance Policies. Definitions: Whole Life Insurance: Whole life combines term insurance with an investment component. A whole life policy has two elements the mortality charge, that part of the premium that pays for the insurance coverage and a reserve, the investment component that earns interest. As the insured person ages, the portion that goes into the reserve decreases while the portion that pays for the mortality charge increases. In addition to interest, many companies credit the reserve with an annual dividend, depending on the insurer s loss experience and investment performance. Cash Surrender value: (also called cash value) is what the owner would receive if the policy were surrendered for cash. The cash surrender value may be taken in either cash or a paid-up insurance policy (may be less than the initial face value of the policy). Universal Life Insurance: Like whole life, combines insurance with savings. The savings component, called an accumulation fund, earns interest monthly and is used to pay the mortality 6

8 charge. Actual results may vary significantly from the policy illustration. A poor projection may necessitate an increase in premium payments, or payment of premiums from the cash value of the policy, thereby reducing its death benefit to the owner. Variable Life Insurance: combines a mortality charge with a savings vehicle that the owner chooses from among a number of alternatives offered by the insurer. The savings vehicle is usually one of several investment portfolios that are structured like mutual funds. The insurer often manages these funds, collecting fees for administering the insurance and managing the portfolios.?variable returns can fluctuate with the financial markets, affecting the cash value of the policy or requiring additional premium payments. Term Life Insurance: so-called because it covers the insured person for a fixed span of time. There are two types of premiums. Level term premiums remain constant for the life of the policy. Annual renewable premiums increase with the age of the insured person. The death benefit is only paid if the insured person dies within the time parameters of the policy. Policy Illustration: A printed hypothetical projection of the policy s long-term performance based on assumptions input through negotiation between the policy owner and the insurance company representative. Since the reserve component of a life insurance policy is subject to the fluctuations of the investment marketplace, no illustration is guaranteed, and each one should be reviewed carefully before committing to purchase. Development officers who anticipate gifts of life insurance policies should inform the (appropriate office) at the earliest opportunity. Every gift of life insurance which requires premium payments should be accompanied by a written agreement which states that (specified office) will pay the premiums. If the donor intends to make corresponding gifts to compensate for premium payments, those gifts should be recorded as pledges for that amount in increments of years. At the end of each pledge period, that agreement should be renewed. The (specified office) should give careful consideration to whether it wishes to continue to solicit such donors for additional current year gifts or future campaign gifts for the time period during which such a pledge is open. (specified office) will record premium payments made by the donor as outright gifts in the year in which they are received. The (specified office) will prepare reminders for the donor when premium payments are due. In those instances where (our charity) is named as the beneficiary only, the (specified office) and the development officer working with the particular donor should monitor this gift arrangement in a way similar to that of bequest intentions. Whole Life Insurance: (Our charity) will automatically record as gift property and acknowledge to the donor without the necessity of review and approval by the (specified office) gifts of whole life insurance policies which meet the following criteria: The policy is a whole life insurance policy which is either paid-up or, if not paid-up as of the date of gift: may be surrendered for its current value by (our charity); or may be converted to a reduced face amount paid up policy; or the donor agrees to make charitable contribution to (specified office) in the amount of any premiums, including unscheduled premiums, which may become due, or 7

9 the donor has sufficient value and/or dividend that will keep the policy in force without further payment of premiums. (our charity) is designated as the owner and the beneficiary of the policy. (While the policy will identify (our charity) as the beneficiary, the development officer should work with the donor to clarify the purpose of the gift whether it be for endowment (existing or new), specific program, or unrestricted use by attachment of a memorandum, letter, or endowment agreement to the policy.) If intended for endowment purposes, the face value of the policy meets the minimum funding standards for endowments in force at the time of the maturity of the policy. The gift agreement establishing the endowment will specify that the policy proceeds will be added to the (specified fund) if the amount is insufficient to fund the endowment at the relevant time. The policy should comply with insurable interest laws of the state of issue Paid-up whole life or universal life policies of any amount given outright ((SPECIFIED OFFICE) named both owner and beneficiary) will be recorded as gift property and acknowledged to the donor. Term insurance policies, nor policies that name (our charity)as a secondary or contingent beneficiary, will not be recorded/acknowledged as gifts; but, the donor will be encouraged to name (our charity) as the beneficiary of such a policy in the event that the proposed gift cannot be re-structured in any other way. The donor should state the purpose or designation of the gift at the time the policy is donated. 2.7 Gifts of Publicly Traded Stock and Securities. Marketable bonds or other securities that will mature are acceptable as gifts regardless of maturity date. Proposed gifts of non-liquid securities will be subject to staff review. In such a situation, the development officer associated with the proposed gift will draft a proposal for the (specified office) to submit for the Gift Acceptance Review Process. Such a proposal would be similar in nature to that used in the case of proposed gifts of real estate. (See below.) Detailed instructions on making gifts of appreciated securities are contained in (specified appendix or document) 2.8 Gifts of Closely Held Business Interests. For purposes of this document, a closely held business is any whose value cannot be established by reference to trades on an active securities market. Examples include, but are not limited to: some closely held C- Corporations, S-Corporations, sole proprietorships, Limited Liability Companies, Limited Liability Partnerships. An appraisal performed by an independent qualified appraiser trained in determining values for closely held business interests will be required for all such gifts. The appraiser must meet the requirements specified by the IRS in its Publication 561 (Determining the Value of Donated Property), Rev. Ruling 59-60, and instructions for IRS Form 8283 (Non-Cash Charitable Contributions). The nature of closely held entities and their corresponding stock present special circumstances that require careful consideration during the review of a proposed gift involving closely held securities. The consideration of closely held securities requires review on a case-by-case basis. The lack of a market to determine what a willing buyer would pay a willing seller for closely held securities affects the need for the Gift Acceptance Review Process to determine the value and liquidity of the proposed gift property upon receipt. Donors of closely held stock (must/should) be represented by counsel qualified to handle planned gifts of such 8

10 property. An independent third party trustee, named by the donor, may be required to serve so long as closely held stock is held in trust. There can be no prearranged sale of the donated property by the donor. Subject to approval of counsel, (specified office) may need a buyer prior to accepting the gift. (our charity) will accept only those business interests which are to be disposed of immediately following completion of the gift. The donor and (specified office) must hold a preliminary meeting with the donor s attorney and/or CPA to ensure that al parties are fully informed and understand the legal and accounting implications of the proposed gift. Determine the donor s objectives for the gift, and explore alternative charitable gift strategies that might better suit the donor s objectives. Explain prohibitions against dealing with disqualified persons. Obtain consensus on a schedule for completing prerequisites for the gift o Choice of a qualified appraiser and timing of the appraisal (must be within 60 days prior to the gift date) o Retaining professional advisors (attorney, accountant) o Drafting and review of controlling documents o Conducting any necessary environmental reviews o Seeking IRS rulings if the tax effect of the proposed gift transaction is uncertain o Seeking a buyer for the donated property, within these and other pertinent (our charity) policies Acceptance of a gift of closely held stock or other property requires approval by (specified office/s) 2.9 Gifts of Real Property (Real Estate). For purposes of this document, real property includes, but is not limited to, improved and unimproved land, residences, condominiums, apartment buildings, rental property, commercial property, and farms. (our charity) will consider gifts of real property, both improved and unimproved, including gifts subject to a retained life estate, only after a thorough review of the criteria for acceptance set forth below under the direction and supervision of the (specified office). Development Officers must understand and communicate to donors that it is (our charity s) policy to dispose of all gifts of real estate (other than property which (our charity) wishes to retain for a related use) as expeditiously as possible. Thus, regardless of the value placed on the property by the donor's appraisal, (specified office) will attempt to sell at a reasonable price in light of current market conditions. The donor must be informed that any such sale occurring within two years of the date of gift will be reported to the IRS on Form The donor will be encouraged to seek independent counsel to address tax-related issues and any other matters for which such counsel would be appropriate. If the Gift Acceptance Review Process makes a preliminary determination that the proposed gift is acceptable, then the (specified office) will ask (our charity) s legal counsel to review the documents, deeds, or studies associated with the proposed gift property to determine legal sufficiency. The donor / owner of the proposed gift property is expected to represent and to warrant that: The donor is the rightful owner of the property. No violations of state, local or federal law exist on the property. No restrictions or adverse conditions exist within the title. There are no unrecorded rights of way, easements, or encumbrances attached to the property. There are no contractual or other donative commitments to other individuals, corporations, or 9

11 groups attached to the property. The property is neither the subject of nor threatened with litigation. A. Criteria for Acceptance There are a number of requirements that must be met in order for a proposed gift of real estate to be accepted. These requirements include, but are not limited to: Donative Intent: There must be a clear charitable intent on the part of the donor(s). Due Diligence Review: (specified office) will complete all the due diligence detailed in (pertinent instructions document) Marketing Plan: A business plan for the sale of the property must be developed and the donor must understand and be in agreement with it. Market Value and Marketability. (specified office) must receive a reasonably current appraisal of the fair market value of the property and the legal interest in the property (our charity) would receive if the proposed gift is approved. Development officers will inform the donor that, if the gift is completed, the IRS will require an appraisal made within sixty days prior to the date of gift or prior to the due date of the donor s tax return reporting the gift. In cases in which the donor is unable to provide an appraisal, (specified office) may obtain any independent appraisal to substantiate the property s value. (Strongly recommended) Potential Environmental Risks. All proposed gifts of real property, including gifts from estates, must be accompanied by a Phase I environmental audit. The only permitted exception to this requirement is for residential property that has been used solely for residential purposes for not less than twenty years. In cases where this exception applies and no environmental audit is undertaken, the donor/executor must have an outside party complete a (pertinent instructions document) and may be required to execute an environmental indemnity agreement. Even in cases where a Phase I audit is submitted, the (specified office) may require that the donor sign an environmental indemnity agreement. Limitations and Encumbrances. The existence of any and all mortgages, deeds of trust, restrictions, reservations, easements, mechanic liens and other limitations of record must be disclosed. No gift of real estate will be accepted until all mortgages, deeds of trust, liens and other encumbrances have been discharged, except in very unusual cases where the fair market value of (our charity)'s interest in the property net of all encumbrances is substantial. Carrying Costs. The existence and amount of any carrying costs, including but not limited to property owners' association dues, country club membership dues and transfer charges, taxes and insurance, must be disclosed. Title Information. A copy of any title information in the possession of the donor, such as the most recent survey of the property, a title insurance policy, and/or an attorney's title opinion, must be furnished. B. Approval / Acceptance Policy (1) The development officer will prepare a written summary of the gift proposal and submit that summary to the (specified office). (2) The (specified office) will review the material and make a determination as to whether to accept or reject the proposed gift (or, if necessary, to postpone a decision pending the receipt of additional information). After the final determination is complete, the (specified office) shall communicate the decision to the donor in writing, which may include conditions imposed by the (specified office) prior to acceptance. (3) If a proposed gift of real property is approved by the (specified office), (our charity) will acknowledge receipt of the gift upon notice that the deed to the property has been properly recorded in the appropriate 10

12 the Registry of Deeds. (specified office) will not appraise or assign a value to the gift property. It is the donor's responsibility to establish a value for the gift and to provide, at the donor's expense, a qualified appraisal required by the IRS. (4) The gift will be completed by the execution and delivery of a deed of gift or other appropriate conveyance. The costs associated with the conveyance and delivery of the gift, including but not limited to recording fees and, if deemed necessary by the (specified office) a current survey, title insurance and/or an attorney's title opinion, will be either paid by the donor or charged to the department, program, or endowment that will benefit by the donation. In addition, the IRS requires donor facilitation of filling Form 8232 for gifts of real property. In accordance with IRS required practice, this form is then to be sent to (specified office) to be authorized by means of signature. (5) (our charity) will attempt to sell such property for its appraised value. However, sale for such a price might not always be possible. Accordingly, (our charity) may sell such property for what it reasonably determines is a fair sales price provided that, if the appraised value exceeds $, the approval of the (specified office) will be required for a sale at a price less than % of the appraised value. If the (specified office) deems it appropriate, a new appraisal will be obtained if the proposed sales price falls below % of the gift appraisal value shown on Form (6) Upon acceptance of a gift, (specified office) will designate an account for charging expenses associated with the gift pending disposition. (7) Upon sale of the property, a final report will be prepared on the property by (specified office), including a financial summary of net proceeds (9) (specified office) is responsible for filing Form 8282 for gifts of real property sold within two years of the date of gift Bargain Sales. As an alternative to an outright gift of real property, a donor may consider the use of a bargain sale to create a gift for the benefit of (our charity). By definition, a Bargain Sale is the purchase of property by charity for less than fair market value as determined by a qualified appraisal. Typically, a bargain sale involves real property. For this reason, the essential considerations and due diligence used for an outright gift of real property would be appropriate in the case of a proposed bargain sale. The Gift Acceptance Review Process will consider such proposals prior before the sale occurs. Unless the property is important for its potential use by (our charity), the central considerations for acceptance would be market value and marketability. During consideration of the proposal, the donor should be advised of the potential tax implications of a bargain sale, which differ from those arising from an outright or deferred gift of real property Gifts of Remainder Interests in Real Property. As an alternative to an outright gift of real property, a donor may consider the gift of a future interest in real property. This gift strategy applies only to personal residences, (vacation homes, or farms), since the presumption of the donor retaining the right to live there is key to the deductibility of the gift. The essential element of such a proposed gift plan would be the creation of a life interest (i.e., life estate) in the particular real property designated for the donor (and/or other life beneficiary) and a remainder interest designated to (our charity). Such a gift involves a completed transaction in which (our charity) becomes the owner of a fully vested remainder interest in the gift property. In terms of fair market value, both the life interest and the remainder interest have values that likely can be determined readily. 11

13 The donor will sign a Remainder Interest Agreement with (our charity) that stipulates donor s responsibility for essential terms of the shared property: Property tax management Insurance coverage Maintenance costs Approval of any major improvements by (our charity) Any conditions for leasing or other use Because the underlying gift property is real property, many of the issues are the same as they would be for proposed outright gifts of real property and similar due diligence review should be conducted. However, because of the deferred nature of the remainder interest, several particular issues require initiation of the Gift Acceptance Review process: The economic responsibilities of the respective parties anticipated for the term of the life estate (our charity) s ability to liquidate the interest If the donor wishes to move or to donate the life estate, a subsequent agreement may be negotiated with (specified office) for that gift Gifts of Tangible Personal Property. Tangible personal property includes, but is not limited to, such items as: Books Manuscripts & archival materials Jewelry Antiques Collections Works of art Vehicles Boats Films Audio-visual equipment/materials Firearms Computer equipment Musical instruments Lab equipment/supplies Livestock and other animals Furniture Gifts of tangible personal property created by the donor are considered ordinary income property and are subject to a reduction of fair market value by the amount for which the item could have been sold. This leaves the value of the materials used in the property s creation as the gift value. If a proposed gift of tangible personal property is of scholarly interest or otherwise useful to (our charity) (related use), such a gift may be acceptable by (our charity/specified office). As a general rule, proposed gifts of little artistic value or those lacking historical, literary, or scientific significance should be discouraged. If a proposed gift of tangible personal property is not of scholarly interest or otherwise useful to (our charity) (unrelated use), such a gift may be acceptable, but only if it has a reasonable fair market value 12

14 and can be liquidated in an expedient manner. In such a case, the donor must be advised of (our charity)'s plans to accept the property for the purpose of liquidating it. The donor also should be advised that there may be potential tax implications arising from such an acceptance decision which should be reviewed by the donor and the donor's independent advisors. In such a case, the donor should be advised that the proceeds from the sale of such gift property will enable (our charity) to meet its highest priority needs. In all cases, proposed gifts of tangible property will not be accepted with a condition or expectation on the part of the donor that the gift property will be exhibited on a permanent or other basis at or by (our charity) - or that the gift property will be maintained as such; provided, however, that (our charity) reserves the right to exercise discretion during the Gift Acceptance Review Process to accept gift property with such a condition. No expectation or condition should be accepted for holding unrelated use property before sale. (our charity) will be free to convert such property to cash at its earliest convenience. B. Approval / Acceptance Policy If a preliminary determination is made that the proposed items may be of interest or use to (our charity), then the development officer, with the assistance of the above-referenced consulting official, will draft a written proposal for the (specified office) to present for the Gift Acceptance Review Process. (specified office), with assistance from any development officer representing the donor and / or other appropriate officials will prepare a written summary of the gift proposal and submit that summary to the (specified office). At a minimum, the summary shall include the following information: description of asset the purpose of the gift (e.g., to fund an endowed fund, a deferred gift, an unrestricted gift) and the department(s), programs(s), or endowment(s) to benefit from the gift an estimate or appraisal of the gift's fair market value and marketability A brief statement of its scholarly or artistic value. any potential use (as opposed to sale) and, if so, written review and endorsement by the department to benefit from the asset any special arrangements requested by the donor concerning disposition (e.g., price considerations, time duration prior to disposition, potential buyers, etc.). An estimate of storage costs and any other expenses related to accepting the proposed gift. An assessment of the possibility of any adverse publicity for (our charity) if the gift is accepted Any special arrangements or stipulations requested by the donor as a courtesy. A qualified appraisal supplied by the donor if the value of the gift is estimated to be over $5,000. If the estimated value is less than $5,000, a knowledgeable (our charity or external) official can provide an estimate. (specified office) will review the material presented make a determination as of whether to accept or reject the proposed gift (or, if necessary, to postpone a decision pending the receipt of additional information). After the final determination of the (specified office) is complete, the (specified office) must communicate the decision to the donor in writing. If a proposed gift of tangible personal property is approved, (specified office) will acknowledge receipt of the gift on behalf of (our charity). (our charity) will not appraise or assign a value to the gift property. It is the donor's responsibility to establish a value for the gift and to provide, at the donor's expense, a qualified appraisal required by the IRS in the case of gifts of tangible personal property valued in excess of $5,000. The gift will be completed by the execution and delivery of a deed of gift or other appropriate conveyance, and the delivery of the property, as applicable. The costs associated with the conveyance and delivery of the gift will be paid by the donor. In addition, the filing of Form 8283 by the donor is required by the IRS for gifts 13

15 of tangible personal property valued at more than $500. This form should be sent to (specified office) to be signed by a proper officer as required by the IRS. A Word on Livestock The Gift Acceptance Review Process should carefully consider any offer of livestock to (our charity). There may be additional liability issues to consider such as breakaway livestock, diseased animals, and environmental conditions (runoff, unpleasant odors, etc.). Other issues that may arise include receiving livestock without the land, feed and other supplies necessary to sustain them, and receiving livestock with the donor's expectation that (our charity) will rent such supporting items from the donor. There are also issues that should be brought to the attention of the prospective donor as well: It is usually preferable for (our charity) to invite the Donor to consider a gift of an undivided interest in such assets as livestock, enabling (our charity) to benefit from any subsequent sale of the livestock instead of accepting the burden of outright ownership. Cows, other livestock, thoroughbreds, and breeding stocks are generally considered to be tangible personal property. As such the donor's potential tax deduction for a charitable gift is limited to the donor's basis (unless the livestock were to meet the requirements of the related use rules). However, if the prospective donor is a farmer, the livestock may be considered a long-term capital gain asset which, in turn, raises further questions for the prospective donor to consider regarding such a gift. During the course of the review, it may be possible and appropriate for the donor to reconsider the gift plan and substitute other property for the livestock in order to make a comparable gift. Following consideration of the proposed gift through the Gift Acceptance Review Process, a determination will be made whether to accept the proposed gift property. The decision will be reported to all appropriate parties within (our charity). Upon acceptance and receipt, the (specified office) will prepare an acknowledgment letter for the donor. The donor will be advised that it is the responsibility of the donor to establish a value for the gift for purposes of the U.S. IRS - and, to provide, at the donor's expense, a qualified appraisal if required by the U.S IRS. When a U.S. IRS Form 8283 is provided by the donor, the (specified office) will complete and execute the form on behalf of (our charity) and, if the property is sold within two years, the (specified office)will complete and file U.S. IRS Form C. Disposition of Tangible Personal Property (1) Upon approval of a proposed gift of tangible personal property by (specified office) it will assign the responsibility for disposing of the gift, unless the gift is intended to be put to a specific purpose. Any guidelines (specified office) wishes to impose on disposition, including minimum sales price and approval or rejection of any special arrangements with the donor, will be put in writing. (2) Upon approval of a proposed gift, an account will be established for charging expenses associated with the gift pending disposition. (3) Until the property is sold or otherwise disposed of, the person responsible for disposing of the gift will prepare quarterly status reports and distribute them to (specified office/s). (4) (specified office) must be consulted before a gift of tangible personal property may be sold for less than appraised value, estimated fair market value, or guidelines imposed by the (specified office) in approving the gift, as the case may be. 14