all gifts are not equal! policies allow staff to maintain consistency and standards what should the policies include? Executive Summary Contents

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1 Why You Need Gift Acceptance Policies White Paper Why You Need Gift Acceptance Policies How Thoughtful Planning about Non-Cash Gifts Can Improve Your Donor Relationships Katherine Swank, J.D., Consultant, Target Analytics, a Blackbaud Company all gifts are not equal! Have you ever answered your office phone and received an offer of a donated timeshare? Has a well-meaning volunteer approached you with a new and exciting way to promote future gifts through a life insurance program? If not, let me assure you that it s only a matter of time until a scenario like this happens. And if it already has, you may have hesitated to commit an answer and then struggled over the consequences of rejecting or accepting it. All gifts are not equal in their financial value to your organization, nor are they equal in value and impact from one nonprofit to the next. A gift acceptance policy that clearly sets forth your organizational position on non-cash and deferred gifts not only provides you a road map but also removes the development team from the decision-making process and puts it squarely with the board of directors or trustees, where it belongs. When first considering gift acceptance policies, you should start with an inventory of the types of gifts you currently accept, coupled with gifts that have already been offered but that you have turned down. Add to your list gifts that you are considering accepting in the future. With this in hand, you are ready to start the process of formulating your organization s gift acceptance policies. Executive Summary Many nonprofit organizations don t believe their fundraising programs are sophisticated enough to require a gift acceptance policy, especially those whose funding is primarily based on memberships, annual gifts, and special events. But it s only a matter of time before a donor offers you a remote desert property, a share in a race-horse, or another unexpected gift. A wellcrafted policy can help you replace an awkward rejection with a structured discussion and eventual gift that is both meaningful to the donor and appropriate to further your mission. policies allow staff to maintain consistency and standards The most practical application of gift acceptance policies is that they provide development staff and volunteer leadership with a guide from which to solicit mission funds. Policies outline the types and forms of donations that will be readily accepted or may be accepted after further review. This allows financial and development staff to concentrate on the day-to-day process of accepting, recording, acknowledging, and stewarding commonly received gift assets routinely. Equally, policies direct staff to seek leadership approval for certain gifts or even direct staff to reject an offered gift outright. By default, they frame the organization s marketing efforts both to insiders and to general constituents. what should the policies include? There are many examples and templates of gift acceptance policies available for general use through consultants and the Internet. Every organization, however, needs policies that incorporate its specific requirements. Policies adopted by the local animal shelter will vary from those of a child advocate program; a youth organization dedicated to teaching sailing may accept boats and boating equipment, while a public radio network may choose to reject such gifts. While a simple planned gift program s policies could be completed in less than ten pages, every organization should consider the following sections. Contents All Gifts Are Not Equal!... 1 Policies Allow Staff to Maintain Consistency and Standards What Should the Policies Include?. 1 Policies Drive Your Fundraising Marketing Efforts Use Your Gift Acceptance Policies to Enhance Donor Relationships Conclusion Non-Cash Gift Inventory

2 A statement on the organization s mission and purpose of the gift policies; Guidelines on when to use outside legal counsel; A list of the types of gifts that can be accepted on behalf of the organization by development staff and the types of gifts that require approval from the chief executive or chief financial officer; A description of the types of gift restrictions that are acceptable; A listing of the types of planned gift vehicles accepted; A description of the form of gifts accepted; A statement regarding the disposition of gifts accepted; A statement regarding the organization s role in gift administration; A statement regarding the responsible party for legal and professional fees to complete the gift; A statement of appropriate reporting, counting, and valuation of gifts on the nonprofit books; Regular review and changes to the policies. policies drive your fundraising marketing efforts Up-to-date and flexible gift policies provide development staff with a list of current and deferred gift types to market to appropriate donors. The exercise of creating and periodically reviewing the policies also educates paid and volunteer leadership on acceptable gift forms and may provoke interest in one or more giving methods amongst this group of insiders and loyal supporters. For example, a nonprofit board or development committee that sets about to understand and prepare to offer charitable gift annuities must look at several issues. These include whether to determine a minimum initial gift value and whether to set a minimum entry age for donors. This could also include choosing an outside management firm to handle the administration and legal reporting of the program and the decision to reinsure the contracts or not. The process by itself educates and cultivates the committee members on the giving vehicles and creates an inherent opportunity to qualify and solicit members to complete a charitable gift annuity contract. About the Author Katherine Swank, J.D. With more than 20 years of legal and nonprofit management experience, Katherine Swank has raised approximately $215 million for national healthcare and public broadcasting organizations, as well as an independent law school. Prior to joining Target Analytics in May 2007, Ms. Swank was the national director of gift planning at the National Multiple Sclerosis Society, where she provided fundraising consulting services to the Society s chapter leadership and development staff for six years. She is an affiliate faculty member of Regis University s master of nonprofit management degree program in Denver, teaching classroom and online courses on wealth and philanthropy. She holds an independent studies degree from the University of Northern Colorado and a law degree from the Drake University School of Law in Des Moines, Iowa. The same is true for all deferred and non-cash gift subjects: If your policy does not allow the acceptance of gifts of real estate, naturally you will neither promote such gifts nor use examples of gifts that include the use of real estate in your marketing. The policies themselves prevent you from sending mixed messages to your donors. Once your policies are written, you can begin to focus on promoting the gifts from which you expect to receive the highest return. Maximize your chances for success by identifying and target-marketing your most likely prospect segments. Predictive giving behavior modeling from a technology provider is one such solution. 2

3 use your gift acceptance policies to enhance donor relationships Make your gift acceptance policies a conduit for your major and planned giving programs. If you accept bequests through wills and trusts, you will want to collect stories of both living and deceased donors who have completed these gifts. If donors routinely give you gifts of stocks or securities, be sure that your annual fund solicitations reveal this fact. Don t assume that all of your donors want to make a gift using a check or a credit card. Non-cash gifts can be easy to accept and, generally, they are larger than cash-equivalent gifts. Frequently, a non-cash or deferred gift reflects a close bond that a donor feels with your organization. Pay attention! Your donor is raising his hand when he gives you a gift of stock. Your volunteer is indicating her intention to create a closer relationship when she mentions that she has left you a gift in her will. Use these indicators to move a seemingly ordinary donor or volunteer into your pool of constituents who receive extraordinary attention. People who care enough to include you in their final plans alongside their loved ones or reach into their portfolio of long-term financial investments are special. Statistically speaking, they will become more consistent and larger annual donors, and their planned gifts may turn out to be ten times, a hundred times, or even several thousand times larger than their average annual gifts. Additionally, these extra special people create a very personal collection of real-life donor stories that provides you with ready-to-use examples for marketing materials, such as newsletter articles, pictorial advertisements for internal publications, and your website. Lists of donors who have completed planned gifts, both living and deceased, make a vivid statement that you accept deferred gifts, you are prepared to steward them correctly, and you appreciate them. Remind your donors at every opportunity of the types of gifts that you accept. Start by informing and periodically reminding your leadership and staff. Expand your efforts by target marketing specific gift ideas to your most likely constituents. Here is a short list of ways to keep your policies current and relevant to your mission funding efforts, as well as to encourage your constituents to make such gifts: Publish your gift acceptance policies on your website and in your annual report; Recognize donors who have completed legacy gifts in your regular publications; Provide check-off boxes, a website address, and the name and contact information of the person who can provide information about planned gifts. For more ideas on marketing planned gifts to your constituents, read How the Right Marketing Strategies Can Enhance Your Planned Giving Program, a white paper by Lawrence Henze. Make certain that your leadership and staff have the opportunity to hear about and consider planned gifts as well. After all, your closest, most active, and committed friends may well be the first to consider and complete a planned gift. To do this: Include your gift acceptance policies in your board of directors orientation materials; Make certain the review of the policies is on the board agenda at least annually; 3

4 Include them in your staff orientation materials; Give staff members a copy of your donor stories and invite them to ask questions about making planned gifts; About Blackbaud Blackbaud is the leading global provider of software and services designed Highlight board and staff members who complete a gift, and make them part of your recognition society. Consider special recognition in your annual report for staff and leadership with planned gift commitments. Also create a simple hand-out sheet that lists the different ways to give to your organization. Generally, such a marketing tool can be one page in length and gives a short description of the types and forms of gifts you accept. Your gift acceptance policies provide you the list. This piece should be easy to read, and you should stay away from technical language. Talking to donors about planned gifts is more like going on a date than it is like having a financial meeting. To find out how to start these conversations, read another one of my white papers How To Talk with Donors about Planned Gifts. conclusion Gift acceptance policies provide a well-lit path upon which donors can find their way. Determining which non-cash and deferred gifts are most appropriate for your organization not only focuses your solicitations but hones your marketing resources toward those groups of prospects most likely to respond. Use the attached sample checklist to get started today! specifically for nonprofit organizations, enabling them to improve operational efficiency, build strong relationships, and raise more money to support their missions. Approximately 19,000 organizations use one or more of Blackbaud products and services for fundraising, constituent relationship management, financial management, direct marketing, school administration, ticketing, business intelligence, website management, prospect research, consulting, and analytics. Since 1981, Blackbaud s sole focus and expertise has been partnering with nonprofits and providing them the solutions they need to make a difference in their local communities and worldwide. Headquartered in the United States, Blackbaud also has operations in Canada, the United Kingdom, and Australia. For more information about Blackbaud solutions, contact a Blackbaud account representative. In the United States and Canada, call toll-free In Europe, call +44 (0) Visit us on the web at June 2008, Blackbaud, Inc. This white paper is for informational purposes only. Blackbaud makes no warranties, expressed or implied, in this summary. The information contained in this document represents the current view of Blackbaud, Inc., on the items discussed as of the date of this publication. If you have questions about how this white paper s content applies to your organization, you should seek advice from appropriate professional counsel. All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc. The names of actual companies and products mentioned herein may be the trademarks of their respective owners. 4

5 non-cash gift inventory Use this inventory to lead a discussion on your organization s desire to accept, administer, and dispose of the each of the following noncash gift types: Gift Type Acceptance Status Gift Acceptance Policy Status Needs to be updated/ included in gift acceptance policies Is included in current gift acceptance policies Will not accept May accept in the future Currently accept Stocks and securities o o o o o Mutual fund shares o o o o o Distributions from commercial annuities o o o o o Real property (land and/or buildings) o o o o o Tangible personal property o o o o o Bequests o o o o o Charitable gift annuities o o o o o Bargain sales o o o o o Life income arrangements o o o o o Life insurance o o o o o Distributions from retirement plans o o o o o Oil, gas, and mineral interests o o o o o Timeshares and partial interests in real estate o o o o o Business interests o o o o o Closely held securities o o o o o Animals o o o o o Automobiles, boats, and other vehicles o o o o o 5

6 ABC Nonprofit Gift Acceptance & Fundraising Policy Adopted March 2007 Revised May 2008

7 I. INTRODUCTION The ABC Nonprofit is a non-profit corporation organized under the laws of the Commonwealth of Pennsylvania. ABC Nonprofit encourages the solicitation and acceptance of gifts for purposes that help the organization further and fulfill its mission. The ABC Nonprofit Board of Managers and staff solicit outright and deferred gifts from individuals, foundations, and corporations to secure the future growth of ABC Nonprofit. Positive relationships among all these parties are essential to ABC Nonprofit s financial stability. Responsibility for the preservation and enhancement of philanthropy shall be retained by the Board of Managers and carried out as herein defined. The goal of this fund development & gift acceptance policy is to uniformly treat donors and their gifts with full disclosure and provide guidelines for the acceptance and stewardship of gifts. The provisions of this policy apply to all gifts received by ABC Nonprofit for any of its programs or services. Specific gifts are considered on their merits and final action is taken on those as authorized by the ABC Nonprofit Board of Managers. II. LEGAL & ETHICAL CONSIDERATIONS A. ABC Nonprofit cannot give accounting, tax, or legal advice but works closely with the donor s advisors. It is strongly encouraged that each donor consult with a qualified advisor. It is the donor s responsibility to secure independent legal counsel for all gifts made to ABC Nonprofit. B. Where appropriate, ABC Nonprofit seeks the advice of legal counsel in matters relating to the acceptance of gifts. Review by counsel is recommended for: a. Gifts where ABC Nonprofit is named trustee; b. All gifts involving contracts or other documents where Bryn Mawr Terrace is to assume an obligation; c. All transactions with potential conflict of interest that have the potential for IRS sanctions; and d. Other instances in which the use of counsel is deemed appropriate by the gift acceptance committee. C. In situations where advisors retained by ABC Nonprofit prepare documents or render advice in any form to ABC Nonprofit and/or a donor to ABC Nonprofit, the professional involved is in the employ of ABC Nonprofit and is not acting on behalf of the donor in any documents or other advice rendered. The documents should be reviewed by the donor s counsel prior to the completion of the gift(s).

8 D. At all times ABC Nonprofit employees, members of the Board of Managers, and other volunteers are to avoid conflicts of interest and the appearance of conflicts of interest. A conflict of interest exists whenever a ABC Nonprofit employee or immediate family member has a formal relationship with an actual or prospective donor or a material interest in a firm that is an actual or potential vendor to ABC Nonprofit. E. To avoid any incidence of impropriety, ABC Nonprofit employees and members of the Board of Managers are discouraged from serving as personal representatives or executors of a donor s estate, unless the donor is a relative of the employee or member of the Board of Managers. F. All ABC Nonprofit employees are to avoid acts of actual impropriety as well as acts that create the appearance of impropriety. Therefore, employees are discouraged from serving as the executor, administrator, or trustee of any will or trust in which ABC Nonprofit is named as a beneficiary regardless of the date of the dispositive document. G. ABC Nonprofit does not pay fees to any person as consideration for directing a gift to ABC Nonprofit. H. ABC Nonprofit does not pay commissions or percentages associated with negotiation and acceptance of any form of gift. I. In accordance with the Association of Fundraising Professionals Code of Ethical Principles & Standards of Professional Practice, no fundraiser is compensated based on a percentage of funds raised or on a contingent basis. Non-exempt fundraisers in the employ of ABC Nonprofit are compensated based on the number of hours worked. Independent contractors and consultants are compensated on a project basis. III. POLICY ADMINISTRATION A. The Gift Acceptance Committee 1. Whenever the term gift acceptance committee is referred to in this policy, it consists, at a minimum, of the following individuals: a. President of the Board of Managers b. Chair of the development committee b. Chief executive officer (CEO) c. Chief financial officer (CFO) d. Development & communications director 2. The gift acceptance committee is charged with the following responsibilities:

9 a. Reviewing this policy on an annual basis; b. Recommending any changes to this policy to the Board of Managers; c. Reviewing all non-cash gifts made to ABC Nonprofit; d. Determining when legal counsel is required for the review of a gift; e. Determining when an independent appraisal is required for a gift; f. Approving exceptions to this policy; and g. Other appropriate matters that relate to the acceptance of gifts. B. Authority for Fund Development 1. The Board of Managers has the authority and stewardship responsibility for the following: a. All methods and techniques of fundraising activity; b. All forms of contributions received; c. Professional staff, consultants, and vendors required; d. Investment and management of all funds raised; and e. Disbursement of contribution revenues in exclusive support of the mission of ABC Nonprofit. 2. The development & communications department is responsible to the CEO and the development committee for day-to-day management of all fundraising activities. Professional and support staff will provide the following: a. Leadership, management, and direct support to fundraising programs; b. Acknowledgement of all gifts and maintenance of donor records and recognition; c. Accounting for all gifts received; d. Supervision of annual budget; and e. Direction of all employees, consultants, and vendors hired to support the development & communications department. 3. Related organizations (see Section IX) are authorized to use the name and taxexempt privileges granted to ABC Nonprofit and are subject to the policies and

10 procedures of the development committee. Accounting for all income of and expenses incurred by related organizations is made to the development & communications department and leadership of the related organization. 4. Active volunteer participation in the fund development program is essential to its success. The roles of volunteers are defined as to level of responsibility, period of service, reporting relationships, staff support, and other details as required. A volunteer recognition program is provided to honor the service given by those who lead and assist ABC Nonprofit. C. Management of Fund Development Activities 1. Priorities for public participation and support shall be established by the Board of Managers and carried out by the development committee and related organizations through the development & communications department. 2. All fundraising activities shall be approved in advance by the development committee and the CEO for approved priorities only. Goals and budgets associated with their achievement shall be prepared in advance of active public solicitation. 3. Procedures for Approval for Gift Solicitation a. All priorities for fund development are defined, within procedures established by the CEO, for submission to the Board of Managers for approval, including budgetary authorization. b. Those programs appropriate for fundraising support are identified, and evaluation is performed by the development & communications staff to assess anticipated public support, budget, staff, and volunteer requirements for successful solicitation. 4. Coordination of Fund Development Efforts a. Prior to approaching a prospective donor for a gift, all Board members, staff, and volunteers must receive approval from the development & communications director who is responsible for tracking solicitations. b. Prior to submission of a grant application, the appropriate applicant organization must be determined: ABC Nonprofit, Bryn Mawr Terrace, or the organizations together. D. Authority to Solicit and Receive Gifts All departments and all members of the ABC Nonprofit community are encouraged to identify and assist in soliciting gifts from prospective donors. However, before

11 making such a solicitation or accepting a gift on behalf of ABC Nonprofit, the individual or the department must bring the proposed effort to the specific attention of the development & communications director so appropriate coordination is assured. Conversely, the development & communications director informs the heads of various departments or programs when major gift solicitations are contemplated or gifts benefiting their program and/or department are received. 1. In compliance with Pennsylvania law, no consultants may solicit funds for ABC Nonprofit unless they are registered as a charitable solicitor. 2. Only an officer of ABC Nonprofit may approve and sign contracts. This includes any obligations related to grant funding. E. Public Solicitation Procedures 1. All charitable contributions, regardless of value, form, or designated use, are made only to this organization, using the proper legal name of this corporation. 2. Use of ABC Nonprofit for any fundraising purpose by any other organization or entity requires prior approval of the development committee, acting on recommendations from the development & communications department. 3. Calendar for Solicitation Each 12-month period has limited time for fundraising activities. Coordination and cooperation are required in planning each solicitation. Each fundraising program requires time for its own fulfillment and must also respect the preferred periods when other fundraising programs are scheduled. The calendar for solicitation shall be reviewed and approved by the development committee within 60 days of the start of each fiscal year. Modifications to the calendar must be resolved by the development committee based on the recommendations of development & communications staff. 4. Special Project Campaigns a. Any special project campaign requires approval of the development committee prior to initiation, based on the following: i. Appropriate fit to the existing calendar of fundraising activities; ii. iii. Recruitment of an adequate volunteer committee or sponsoring agency or organization; and Demonstrated potential for profit.

12 b. Separate solicitation programs may be developed to meet urgent priorities or to take advantage of unusual opportunities offered by donors that match well with current fund development objectives. F. Overall responsibility for assuring compliance with the requirements of this policy is assigned to the development & communications director. G. This policy remains in force until changed by the gift acceptance committee. H. All restricted and unrestricted monies received by ABC Nonprofit are put to immediate use or invested under the guidelines of the investment policy adopted by the Board of Managers. I. ABC Nonprofit s gift accounting policies and procedures are in accordance with generally accepted accounting principles (GAAP) as prescribed by the Financial Accounting Standards Board, including Statements of Financial Accounting Standards Nos. 116 and 117. J. No refunds of donations are permitted. IV. DONOR CONSIDERATION & RECOGNITION A. All programs, trust agreements, contracts, or commitments benefit, first and foremost, the individual needs of the donor, and secondly, ABC Nonprofit. A charitable gift that benefits ABC Nonprofit at the expense of the donor s interest should not be encouraged. B. ABC Nonprofit accepts unrestricted gifts and gifts for specific programs and purposes, provided that such gifts are not inconsistent with its stated mission, purposes, and priorities. ABC Nonprofit does not accept gifts that are excessively restrictive in purpose. Gifts that are restrictive include those too difficult to administer or those for purposes outside the mission of ABC Nonprofit. All final decisions on the restrictive nature of the gift, and its acceptance or refusal, are made by the gift acceptance committee. C. A donor may not restrict how gift, bequest, or endowment funds are invested by ABC Nonprofit. All donors of major gifts and endowment funds are notified prior to the gift being made that investment of their gift is in accordance with the investment policy adopted by the Board of Managers. Such notice informs the donor that his/her gift or endowment fund is not segregated but is commingled with ABC Nonprofit s other investments. D. Where a donor desires to place a restriction upon the use of a gift or bequest for a specific program, the donor is required to sign a legal instrument empowering the Board of Managers, after a certain stated number of years, to re-evaluate the restriction.

13 1. If the original program to which the gift was restricted is no longer relevant, such as the discontinuation or alternative funding of a program for which the gift was made, the document must empower the Board of Managers to re-designate the use to a similar program. 2. In addition, this legal instrument should state that, with the written consent of the donor, the Board of Managers may release, in whole or part, any restriction imposed on the use of the gift. If written consent of the donor cannot be obtained by reason of his/her death, disability, unavailability, or impossibility of identification, the Board of Managers may petition the Orphan s Court to release the restriction imposed by the donor or gift instrument on the use or investment of the funds. In no event, however, can a release allow a fund to be used for purposes outside the mission of ABC Nonprofit. E. Any gift may be made in honor of or in memory of the donor or anyone he/she may wish to designate. Notice of the person honored or memorialized must be provided in writing at the time the gift is made. Upon request, notification of the gift is mailed to a third party. The gift amount is not disclosed. F. Gifts made by a donor on behalf of another individual are credited to the actual donor s record. The individual on whose behalf the gift is made receives recognition credit only. 1. Recognition credit is the dollar value of a gift that can be applied toward a naming opportunity, endowment, or giving club membership. G. Donor Privacy 1. All information concerning donors or prospective donors, including their names, the names of their beneficiaries, the exact amount of the gift, size of the estate, or any other information for which there is a reasonable expectation of privacy and/or confidentiality is kept strictly confidential by ABC Nonprofit, its Board of Managers, volunteers, and staff, unless written permission is obtained from the donor to release such information. 2. Donors who wish to remain anonymous and not be included in published lists of donors must state so at the time of the gift. Completion of the donation remittance envelope or mention of name on any correspondence accompanying the donation is deemed written permission to be included in published lists of donors. 3. Donors are welcome to request and receive a complete copy of their records. 4. Only authorized ABC Nonprofit staff and members of the Board of Managers are permitted to view donor files. 5. Donor files remain onsite at ABC Nonprofit.

14 H. All recognition and reward accorded to donors by reason of their gift frequency, amounts, or cumulative total shall be in accordance with the honors and recognition guidelines contained herein. I. Donors and prospective donors may opt out of fundraising mailings via telephone, letter, , or in person. A statement providing opt-out instructions is included in all annual campaign correspondence. J. ABC Nonprofit does not sell or share its donor and mailing lists with other organizations. K. Giving Clubs Annual giving club membership is based on the donor s cumulative giving total for the fiscal year (July 1 June 30). ABC Nonprofit reserves the right to modify the corresponding dollar amounts to keep pace with inflation or to reflect trends in giving. 1. Mabel Pew Myrin Benefactors a. Platinum Level Gifts of $10,000 or more b. Gold Level Gifts between $5,000 and $9,999 c. Silver Level Gifts between $1,000 and $4, Mrs. John S. Henry Patrons Gifts between $500 and $ Board Associates Gifts between $250 and $ Founding Patrons Gifts between $100 and $ President s Circle Gifts between $50 and $99 6. Sustaining Contributors Gifts under $50 7. Mrs. John R. Latimer Circle In-kind gifts of any value I. Legacy Society a. Donors may be members of the Mrs. John R. Latimer Circle and another appropriate giving club based on their cumulative giving total. The legacy society for ABC Nonprofit donors is the 1864 Society. All planned giving donors, including those who have named ABC Nonprofit in their wills, are recognized, according to their wishes, as members of the 1864 Society in published donor lists. Membership in the 1864 Society is granted to individuals who have provided for ABC

15 Nonprofit in their will or through irrevocable or revocable deferred gift arrangements that can be confirmed in writing with a letter of intent. Donors who have designated ABC Nonprofit as a beneficiary of retirement plan assets (e.g. IRA, 401(k)) or life insurance are also eligible to join the 1864 Society. The exact value of the gift does not have to be discernable or disclosed to ABC Nonprofit to qualify for membership in the 1864 Society. J. Honors & Recognition 1. Formal recognition of distinguished service to ABC Nonprofit, in the forms of gift support and voluntary time and talent, shall receive official consideration by the Board of Managers. The qualifications, review and decision procedures, and methods of recognition to be followed in regard to gift support in many of its forms, and as specified in this section, are (a) the naming of buildings, property, or any space therein or (b) the conferring of awards or citations on any individual, institution, association, or society for gift support or services rendered. 2. Guidelines a. The Board of Managers, in concert with the development committee, assesses each recommendation for honors and recognition. The relationship between the honoree s qualifications and the size and scope of the project supported are considered. Consideration in the conferral of honors and recognition will include the following: i. Benefit to ABC Nonprofit; ii. iii. Visibility and prominence accorded to the honoree; and Use of honors and recognition to further the goals and objectives of ABC Nonprofit in financial gain and in public recognition and respect. b. Individuals or institutions that make large contributions are qualified for honors and recognition. Gifts are recognized at the discretion of the development committee. c. Recommendations for honors and recognition are made to the Board of Managers after review and approval by the development committee, with adequate details on the individual or institution to be honored and the reasons for such action by the Board of Managers. d. ABC Nonprofit may establish and confer at its pleasure such awards or citations upon individuals or institutions in recognition for voluntary

16 2. Public Notice service and/or financial contributions. These awards or citations may be given at such time and on such occasions as the Board of Managers determines. Recommendations for conferring an award or citation are directed to the development committee, which confers with the President of the Board of Managers and the CEO before action is taken. a. Honors and recognition decisions present opportunities for public announcement. Agreement for such public notice is requested of each honoree, or his/her family or representative(s), in advance. Honorees have the opportunity to notify family and friends and to invite their participation with ABC Nonprofit in any dedication ceremonies and receptions conducted in connection with the conferring of honors and recognition. The CEO and development & communications director are responsible for such public notice. b. Various forms of recognition are available in accordance with the wishes of the donor. Details as to form are included in recommendations submitted to the development committee. Forms of recognition may be among the following: formal dinners, receptions, plaques, gifts to donors and honorees, reports in ABC Nonprofit publications, and other forms of recognition. c. Materials, typeface, and presentation forms must be consistent with the graphics standards established by ABC Nonprofit. The application of overall visual aids, signage, and graphics must be in accordance with graphics standards established by ABC Nonprofit. 3. Naming of Buildings or Space Therein a. All areas of ABC Nonprofit, with the exception of individual resident rooms, are subject to naming. Such identification is appropriate in light of the gift or gifts received and will be sensitive to function and location while being consistent with the building s interior design. b. Before making exceptions to the policies for naming opportunities, the gift acceptance committee considers the following facts and circumstances pertaining to the gift: i. Certainty of the assets to be donated and their future value to ABC Nonprofit; ii. Likelihood of the donor having a change of heart ;

17 iii. Estimated present value of the gift; iv. Donor s connection to ABC Nonprofit; v. Donor s giving history; and vi. Donor s record of volunteer service to ABC Nonprofit. d. ABC Nonprofit reserves naming opportunities for outright gifts and living donors. Use of an estate or planned gift to name property is not preferred but is considered on a case-by-case basis. Unless legally impossible, ABC Nonprofit treats estate and planned gifts with naming elements as a request. ABC Nonprofit honors the request at the final distribution of the gift when the name is appropriate and the gift meets minimum funding for the naming opportunity at the time of distribution. ABC Nonprofit reserves the right to decline gifts with naming restrictions. e. Donors who wish to name an item during a campaign may use the present value of a planned gift only if the following criteria are met: i. The gift is irrevocable; ii. iii. ABC Nonprofit is given a copy of the gift instrument; and The present value of the gift equals the minimum funding amount of the naming opportunity. f. ABC Nonprofit reserves the right to honor, through appropriate naming opportunities, any individual or family irrespective of the individual or family s giving record. Such honors are generally made posthumously. VII. GENERAL GIFT ACCEPTANCE A. Processing Gifts 1. Gifts are recorded as of the date postmarked, if received via postal mail. Handdelivered gifts are recorded as of the date of receipt. 2. When a donation is received, a copy of the check and remittance envelope and/or accompanying letter is made and filed in the appropriate donation binder.

18 3. If the donation is made using a credit card, the name of the donor is written on the credit card receipt and stapled to the original remittance envelope or letter when delivered to the business office for posting. 4. The correct general ledger code is written on checks and credit card receipts. The codes for development are as follows: a Annual Gift Program b Foundation/Corporate Gift c Community Gifts Program d Designated Gift Program/Holiday Fund 5. Gifts in any form received near the date ending the fiscal year may be credited to the prior reporting period if there is evidence the donor intended to make the gift within this period and the gift is received and processed within 10 days of the closing date for the fiscal year-end. B. Crediting Gifts C. Pledges 1. The gross amount of donations made through the United Way of Southeastern Pennsylvania are credited to a donor for recognition purposes. For accounting purposes, the donations are recorded net of United Way s administrative fees. Donors do not receive credit for United Way donations until substantiation is received from the United Way or the donor provides written documentation of the gift. 2. Corporate matching gifts are encouraged, and the donor receives recognition credit for the match. 1. Pledges are considered on a case-by-case basis. 2. Pledges may be fulfilled on a schedule established by the donor over a specified period, up to a maximum of five years from the date of the pledge. Irrevocable deferred gift arrangements are exceptions and are governed by the terms of the trust. D. Use of Grant Funds

19 1. All grant funds given to ABC Nonprofit are to be spent in accordance with the funding agreement as specified by each grant. 2. Prior to submission of a grant proposal, the grant writer is responsible for verifying that ABC Nonprofit can use the funds as requested. E. Gift Acknowledgement and Substantiation All donors are furnished gift acknowledgement letters as soon as possible after the receipt of a gift but no later than 10 days after receipt of the gift. Overall responsibility for assuring compliance with the Internal Revenue Service (IRS) requirements and this policy s guidelines regarding gift acknowledgement and substantiation belongs to the development & communications director. 1. Acknowledgement for all gifts over $250 and gifts of $75 or more for which a benefit was offered by ABC Nonprofit to the donor, whether or not the benefit was utilized by donor, includes proper language related to valuation of the donor s deduction permitted as stated in the current IRS regulations. 2. Acknowledgement letters for gifts of all sizes and types are signed by the CEO. In the CEO s absence, the COO and development & communications director may sign the letters. Gift receipts for in-kind donations may be signed by any member of the development & communications staff. F. Ownership of Gifts a. The development & communications department is responsible for keeping a record of gift receipt and date of acknowledgement. Title to property donated to ABC Nonprofit is held by the organization, not by a single department. G. Appraisals and Required IRS Forms Legal and ethical requirements designed to protect both the donor and ABC Nonprofit prohibit ABC Nonprofit, as an interested party, from appraising gifts. Such appraisals, if required by law or particular circumstances, are conducted by qualified appraisers as defined under IRS regulations. The cost of such an appraisal is the donor s responsibility. In instances where ABC Nonprofit elects to request an independent appraisal, ABC Nonprofit is responsible for the fee. The IRS requires that non-cash gifts, including marketable securities, with a fair market value of over $500 be documented by the filing of Form 8283 with the donor s federal income tax return. For gifts with a total value of $5,000 or more, an appraisal from a qualified appraiser must be attached to Form The CEO and CFO are authorized

20 to sign the Form 8283 to acknowledge ABC Nonprofit s receipt of the gift. ABC Nonprofit staff may not attest to the value the donor places on the item. When gifts with a total value of $5,000 or more are sold by ABC Nonprofit within two years of receipt, the CFO is responsible for filing Form 8282 within 125 days of disposition. H. Evaluation and Acceptance of Certain Types of Gifts Proposed gifts of real or personal property must be evaluated to determine whether the costs to ABC Nonprofit associated with receiving the gift can prudently be accommodated using other ABC Nonprofit resources. For example, accepting real property may require payment of closing costs, payoff of debt secured by the property, and physical changes to the property necessary to assure safety or control environmental hazards. Likewise, the cost to retrofit space on campus and provide necessary utilities to make a proposed gift of equipment usable for ABC Nonprofit purposes may be prohibitive. Occasionally, associated costs may weigh against acceptance of the gift. Acceptance of gifts with reversionary interests or other donor restrictions requires the approval of the CFO. This includes all gifts with life estate interests; any gifts that require the establishment of a new office or program; gifts with naming rights; and gifts with a time schedule or other conditions, such as matching gifts. In addition, the acceptance of in-kind gifts is based upon the relevance to the mission of ABC Nonprofit and/or the financial benefit to accepting said gift. The authority and responsibility for prompt, careful evaluation and acceptance or declination of these gifts lies with the CFO and development & communications director. I. Declining Gifts Gifts may have to be declined under certain conditions including, but not limited to, the following: 1. The gift is restricted and requires support from other resources that are unavailable, inadequate, or may be needed for other institutional purposes. 2. The gift is restricted and supports a purpose or program peripheral to existing principal purposes of ABC Nonprofit or creates or perpetuates programs or obligations that dissipate resources or deflect energies from other programs or purposes. 3. The gift injures the reputation or standing of ABC Nonprofit or generates such controversy as to substantially frustrate and defeat the purpose to be served.

21 J. Gifts Requiring Financial Commitment from the Organization Sometimes gifts require a present or future financial commitment from ABC Nonprofit over and above the amount pledged. Before soliciting or accepting any gift that requires a present or future financial commitment from ABC Nonprofit, approval must be obtained from the CEO. Examples of some gift-related commitments include the following: 1. To provide matching funds 2. To continue a project after the gift has terminated or been exhausted 3. To finance a construction project 4. To establish a permanent, interest-bearing fund when the gift amount is not large enough to carry out its specified purpose 5. To finance and/or administer a project outside the routine functioning and operation of the organization K. Advertised Gift Program Designations Unrestricted gifts are encouraged, but suggested programs are provided for donors. These specified gift programs are as follows: 1. Resident Care and Community Programs 2. Awakenings Program for Residents with Dementia 3. Roger B. Decker Memorial Resource Center for the Blind 4. Charity and Supplemental Care 5. Employee Holiday Fund As needed, additional restricted gift categories may be advertised to donors, such as funds for a match. There is no minimum gift amount required for designation to the aforementioned programs. L. Non-Endowed Named Funds Donors may establish non-endowed named funds. 1. Such funds may be unrestricted or designated for a specific program or purpose. The restriction must follow the guidelines set forth in Section IV.

22 a. Designated funds initiated by a donor will require a written fund agreement. 2. The minimum gift to establish a non-endowed named fund is $10,000. This amount must be received in full within one year of the establishment of the fund. 3. Upon approval of the gift acceptance committee, exceptions to the minimum non-endowed named funds size may be made following the honors and recognition guidelines set forth in Section IV. VI. OUTRIGHT GIFTS A. Unrestricted, outright gifts are acceptable in any amount. B. Cash 1. ABC Nonprofit accepts cash, checks, money orders, MasterCard, and Visa. 2. All checks should be made payable to ABC Nonprofit and should not be made payable to an employee or volunteer for credit to ABC Nonprofit. 3. All checks are deposited in the ordinary course of business. No employee is authorized to delay deposit. C. Publicly-Traded Securities 1. Securities, which are traded on the New York Stock Exchange, American Stock Exchange, NASDAQ, or other readily available markets, are accepted by ABC Nonprofit. The gift of any securities with market restrictions must be approved by the CFO. 2. Securities accepted by ABC Nonprofit are generally sold as soon as practicable, unless it is decided by the CFO to hold the securities as investments of ABC Nonprofit. 3. To maximize tax-saving benefits to the donor, it is advised that donors transfer appreciated securities directly to ABC Nonprofit instead of selling the securities and gifting the proceeds. To maximize their capital loss deductions, donors are advised to sell depreciated securities and gift the proceeds to ABC Nonprofit. 4. The donor is responsible for contacting his/her financial professional to inform him/her of the desire to transfer shares of securities to ABC Nonprofit. ABC Nonprofit staff may assist in the gift process by contacting the financial

23 professional to ensure the transaction takes place in as short a time period as possible. 5. Securities are recorded and valued the date they are deposited in ABC Nonprofit s account. a. Valuation of a gift of a security is derived from the mean of the high and low prices per share on the date of the gift. b. For bonds donated, accrued interest is also included in the gift amount. D. Closely-Held Securities and Ownership Interests 1. Non-publicly traded securities, including limited partnership and similar ownership interests, are accepted only upon prior approval of the gift acceptance committee after review of the prospective donation by the CFO. 2. Such securities or interests may be sold only with the prior approval of the investment committee or its designated agent. 3. ABC Nonprofit does not enter into any agreement whereby the donation of closely-held stock is contingent on ABC Nonprofit s future obligation to redeem the stock. 4. Because values are not readily accessible and there is an indeterminable discount for illiquidity, no valuation is included on the donor s receipt for gifts of closelyheld securities and ownership interests. The donor should consult his/her tax advisor to determine an appropriate deduction to take for such gifts. E. Real Property a. Gift credit for closely-held securities and ownership interests is applied to the donor s record based on proceeds realized upon sale. The ABC Nonprofit gift acceptance committee considers gifts of real property, both improved and unimproved (e.g., detached single-family residences, condominiums, apartment buildings, rental property, commercial property, farms, acreage, etc.), 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 CFO. 1. The minimum acceptable fair market value for a gift of real property is $50,000. Property must be readily marketable and have clear title capable of being insured by a reputable title company at regular rates, unless it is otherwise decided by the Board of Managers. 2. Full interests, partial interests, and remainder interests in real property are all acceptable. Remainder interests are contracts. In the case of such gifts, the

24 donor is expected to agree to pay all property taxes, maintenance expenses, and any property indebtedness. 4. Assets may be given outright, serve as the corpus of a trust arrangement, or in the case of a personal residence, be given with the right of lifetime tenancy by the donor and/or the donor s spouse. 5. Criteria for Acceptance of Real Property a. Market value and marketability The gift acceptance committee must receive a reasonably current appraisal of the fair market value of the property and interest in the property ABC Nonprofit would receive if the proposed gift were approved. The development & communications director informs the donor that, if the gift is completed, the IRS requires an appraisal made within 60 days of the date of the gift and that it is ABC Nonprofit s policy to dispose of all gifts of real estate, other than property which ABC Nonprofit wishes to retain, as expeditiously as possible. Thus, regardless of the value placed on the property by the donor s appraisal, ABC Nonprofit attempts to sell at a reasonable price, in light of current market conditions. b. Potential environmental risks All proposed gifts of real property, including gifts from estates, must be accompanied by an environmental audit performed at the donor s expense. The only permitted exception to this requirement is for residential property that has been used solely for residential purposes for a significant (at least twenty-year) period of time. In cases where this exception applies and no environmental audit is undertaken, the donor/executor may be required to execute an environmental indemnity agreement. Even in the case where an environmental audit is submitted, the donor may be required to sign an environmental indemnity agreement. c. Limitations and encumbrances The existence of any and all mortgages, deeds of trust, restrictions, reservations, easements, liens, and other limitations of record must be disclosed. No gift of real estate is 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 ABC Nonprofit s interest in the property, net of all encumbrances, is substantial. d. 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 by the donor prior to acceptance of the property by ABC Nonprofit.

25 e. 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. f. Additional considerations include the following: i. Type of real property and location ii. iii. iv. Purpose of the gift (e.g., endowment, unrestricted) Any potential ABC Nonprofit use Any special arrangements requested by the donor concerning disposition (e.g., price considerations; time duration prior to disposition; potential buyers; or realtors/brokers with whom the donor would like ABC Nonprofit to list the property, etc.) 6. The execution and delivery of a deed of gift or other appropriate conveyance completes the gift. The costs associated with the conveyance and delivery of the gift, including but not limited to, recording fees and, if deemed necessary by the CFO, a current survey, title insurance, and/or an attorney s title opinion, are the donor s responsibility. F. Personal Property (In-Kind Gifts) 1. In-kind gifts refers to the donation of goods and services. 2. Acceptable items include, but are not limited to, the following: a. Food, if in sufficient quantities and in unopened original packaging b. Office equipment, furniture, and supplies c. Tickets to sporting and entertainment events d. Computer equipment and supplies e. Books, if in saleable condition (i.e. covers intact, no water damage, no highlighting) f. Games and entertainment products (i.e., DVDs, CDs, videocassettes, cassette tapes) g. Decorations

26 h. Household electronics (i.e., televisions, DVD players, VCR players, radios, stereos, cameras) i. New blankets, lap robes, quilts, and afghans for common areas j. Musical instruments k. Arts & crafts supplies l. Flowers, trees, and plants m. Durable medical equipment of the type used by ABC Nonprofit, of which certain items must be unused n. Works of art ready and appropriate for public display o. Gift certificates, new products, or other items suitable for use as prizes or auction items 3. ABC Nonprofit accepts only items that can be used at the facility or readily sold on the open market for a minimum of $500. Unless there are countervailing circumstances, the Board of Managers policy is to sell or otherwise dispose of, within one year after the date of gift, any item of personal property that is gifted to ABC Nonprofit and for which ABC Nonprofit has no use. 4. All gifts of personal property must be reported immediately to the development & communications department. Staff members are encouraged to contact the development office before accepting or taking delivery of in-kind gifts. 5. All donors making in-kind gifts are asked to complete an in-kind donation form so donations are correctly recorded and acknowledged. 6. Only new and gently used items are accepted. 7. ABC Nonprofit does not accept donations of the following property: a. Clothing b. Eyeglasses c. Personal hearing aids d. Incontinence supplies, unless the package is unopened and the product meets central supply s specifications e. Bedding and linens

27 f. Personal grooming products, unless in unopened original packaging and suitable for distribution as a prize g. Property where ABC Nonprofit is obligated to maintain ownership of it in perpetuity h. Livestock and other animals 8. ABC Nonprofit reserves the right to decline any in-kind gifts when the quantity is insufficient for equitable distribution. 9. Based on the availability of a ABC Nonprofit van driver and the travel distance involved, large items accepted as in-kind donations can be picked up from the donor s home or business. 10. Property that requires additional insurance, special facilities, or security to properly safeguard it may not be accepted without prior approval of the gift acceptance committee. 11. Gift credit a. Donors of in-kind gifts are not credited a specific dollar amount unless an appraisal of the gift from a qualified third party accompanies the gift or the gift is new and accompanied by a copy of the purchase receipt. For recording purposes, gifts without an appraisal or receipt copy are valued at $ All in-kind gifts are acknowledged in writing with a thank you letter and a receipt describing the item. 13. The following language is included in the receipt provided for the donation of in-kind gifts with an estimated value greater than $5,000: a. Your gift may require you to complete IRS Form 8283 together with an appraisal of the donated property. Please consult your tax advisor. b. The deduction you receive from this gift may be limited to the lower of the cost or the market value of the goods donated. Please consult your tax advisor. 14. Gifts of Service a. General service Gift receipts are not issued for gifts of general service. Gifts of general service fall under the purview of the volunteer coordinator and are recognized appropriately. Volunteers may receive gift credit for expense

28 reimbursements donated to ABC Nonprofit, upon request and with appropriate receipts. b. Professional service G. Other Property & Considerations Gifts of professional services (e.g., legal, graphic design, accounting, etc.) and partial donations of service (i.e. discounted rates) are eligible for recognition credit for gift clubs only. 1. Special consideration is always given to the nature of any gift and whether it fits with the mission of ABC Nonprofit prior to acceptance of any property, whether real or personal. 2. Generally unacceptable property includes the following: a. Mortgages or notes b. Copyrights and other intellectual property rights c. Royalties d. Easements e. Debt-encumbered property f. Oil, gas, and mineral interests g. Time share interests 3. Exceptions to the above restrictions are considered on a case-by-case basis. Prior approval by the gift acceptance committee is required. 4. Bargain sales are not acceptable without prior approval from the gift acceptance committee. a. A bargain sale is a transaction in which ABC Nonprofit is provided the opportunity to purchase property at less than its fair market value. The gift is usually the difference between the sale price and the market value. 5. Automobiles are acceptable as gifts on a case-by-case basis. Vehicles in working order, free of debt, that pass state inspection, and that are suitable for use by ABC Nonprofit may be donated directly. Inoperable vehicles, or those for which ABC Nonprofit has no use, are accepted through Car Program, LLC, a thirdparty vehicle donation service. Recognition credit for vehicles is based on the Kelley Blue Book value for vehicles retained for use by ABC Nonprofit. For

29 vehicles sold through a third party, donors receive recognition credit for the gross sale price. For accounting purposes, net proceeds from the vehicle s sale are recorded. 6. ABC Nonprofit must receive a reasonably current appraisal of the fair market value of the property and interest in the property ABC Nonprofit would receive if the proposed gift were approved. The donor is informed that, if the gift is completed, the IRS requires an appraisal made within 60 days of the date of the gift. The appraisal and other information must indicate clearly and convincingly that there is a market for the asset under consideration and that the asset can be sold within a reasonable period of time, if it is not an asset ABC Nonprofit can put to use. 7. Other types of gifts not mentioned in this policy may be acceptable, within reason, for the purpose given and in an amount appropriate for the gift type. The gift acceptance committee is expected to use fiscally and legally sound rationale for acceptance. This policy serves as a general guideline under such circumstances. 8. Deed of Gift a. To transfer the ownership or the title of tangible personal property from the donor to ABC Nonprofit requires the physical transfer of the property to ABC Nonprofit from the donor along with the formal acceptance of the property by ABC Nonprofit. A deed of gift accomplishes this transfer. b. ABC Nonprofit reserves the right to require a deed of gift for any donation of personal property. The deed of gift includes an identification of the property to be transferred and a statement of donative intent signed by the donor. c. Sample language for a deed of gift follows:, DONOR, of, hereby confirms that he is the legal owner of and does hereby irrevocably and unconditionally give, grant, and convey an absolute, unconditional, and undivided interest in the item(s) described below, to ABC Nonprofit for the benefit of ABC Nonprofit, hereinafter referred to as DONEE. Title to the items and all associated rights are hereby vested in DONEE, without reservation and free and clear of all encumbrances. DONOR understands and agrees that the item(s) may be displayed, loaned, retained, disposed of, or otherwise employed at the sole discretion of DONEE.

30 VII. DEFERRED/PLANNED GIFTS A. The negotiation and execution of deferred giving plans is done only through the development & communications department, and the gift acceptance committee has the ultimate authority in this process. Not all gifts are accepted. B. When property other than cash, listed securities, or securities traded over-the-counter is involved, final approval of the CFO is required to accept or decline a gift. C. The following planned giving/life income agreements are acceptable when in compliance with the Internal Revenue Code at the time the gift is established and are subject to reformation as tax laws change: 1. Charitable gift annuities 2. Charitable remainder trust (annuity and unitrust) 3. Charitable lead trust (annuity and unitrust) 4. Life insurance D. Charitable Gift Annuities 1. ABC Nonprofit has a charitable gift annuity program, a funding vehicle established under the auspices of the Internal Revenue Code. The fund is managed internally by the CFO. No gift annuity is issued for an amount less than $10,000, for the life of an individual under 55 years of age, or for more than two lives. The charitable gift, computed using government tables, must exceed 25% of the amount transferred for the annuity in order for the gift annuity to be entered into by ABC Nonprofit. 2. By law, ABC Nonprofit only sells charitable gift annuities to residents of the Commonwealth of Pennsylvania. 3. The rate of return for charitable gift annuities is based on the suggested rates of the American Council on Gift Annuities and is dependent on the beneficiary s age. 4. The donor may not make additional contributions to a charitable gift annuity, but the donor may enter into additional contracts. 5. Deferred charitable gift annuities are also available. For this vehicle ABC Nonprofit waits to begin the donor s fixed payout until some specified point in the future that is at least one year from the date of funding.

31 6. Cash and marketable securities are acceptable forms of funding for a charitable gift annuity. ABC Nonprofit does not accept real estate, tangible personal property, or any other illiquid asset in exchange for charitable gift annuities, except under the following conditions: a. The gift annuity is deferred; b. There is at least a five-year period before the commencement of the annuity payment date; c. The value of the property is reasonably certain; and d. The gift acceptance committee approves the arrangement. E. Charitable Remainder Trusts 1. ABC Nonprofit accepts designation as a charitable beneficiary in both charitable remainder unitrusts (CRUT) and charitable remainder annuity trusts (CRAT). 2. If ABC Nonprofit is not named the trustee of the CRUT or CRAT, there is no minimum funding requirement. 3. For CRUTs, the fixed percentage to be paid to non-charitable beneficiaries must be no less than 5 percent and not more than 50 percent of the trust s fair market value. 4. For CRATs, the fixed dollar amount to be paid annually to non-charitable beneficiaries must be no less than 5 percent of the initial fair market value of the property placed in the trust. Beneficiaries with lifetime earnings must be 55 years of age or older. 5. Upon request by a donor, ABC Nonprofit can share a draft of a standard charitable remainder trust agreement with donors. Donors are encouraged to share the draft with their advisor(s). 6. A separate named endowment fund can be established at ABC Nonprofit if the present value of ABC Nonprofit s future interest in the CRUT or CRAT is at least $100, ABC Nonprofit does not accept appointment as the trustee of a CRUT or CRAT unless both the following conditions are met: a. The initial funding amount is $250,000 or more b. ABC Nonprofit is the sole charitable beneficiary

32 8. Charitable remainder trusts for which ABC Nonprofit is a trustee are administered by the investment committee under a separate trust agreement. The investment of trust funds is fully consistent with the objective of each trust. Once the requirements of a trust agreement have been met and the trust is terminated, the assets of the trust are commingled with ABC Nonprofit s other investment assets. F. Charitable Lead Trusts ABC Nonprofit accepts the designation as income beneficiary of a charitable lead trust (CLT) but does not accept appointment as trustee of such a trust. Both charitable lead unitrusts (CLUT) and charitable lead annuity trusts (CLAT) are acceptable forms. G. Payments to donors and beneficiaries on charitable gift annuities, charitable remainder unitrusts, and charitable remainder annuity trusts are made quarterly, semi-annually, or annually according to the terms of the individual agreement. H. Life Insurance 1. ABC Nonprofit accepts gifts of life insurance policies, including whole life, variable, and universal life policies, which meet the following criteria: a. ABC Nonprofit is designated as the owner and the beneficiary of the policy b. The policy is either paid up or, if not paid up as of the date of the gift, meets the following criteria: i. Has a minimum face value of $25,000; ii. iii. Has a payment schedule not to exceed 12 years and which assumes an interest rate not to exceed one percent below the prevailing prime interest rate; and Requires a written pledge of a charitable contribution from the donor to ABC Nonprofit in a total amount that equals or exceeds the total premiums due and with pledge payments scheduled that equal or exceed each policy premium payment as that payment becomes due. This written pledge must also acknowledge the resulting right of ABC Nonprofit to cash in the policy and apply the proceeds of the same for the benefit of ABC Nonprofit as the Board of Managers deems appropriate, giving due consideration to the donor s intent. 2. Gifts of paid-up life insurance are preferable, as these are completed, noncontingent gifts. However, designations of contingent term life insurance

33 policies are accepted by ABC Nonprofit under certain circumstances. ABC Nonprofit encourages donors to name ABC Nonprofit as the exclusive beneficiary for life insurance policies that have been purchased on their lives. Likewise, ABC Nonprofit accepts the naming of ABC Nonprofit as a partial interest beneficiary of life insurance policies that donors have purchased on their lives. 3. ABC Nonprofit does not, as a matter of course, agree to accept gifts from donors for the purpose of purchasing life insurance on the donor s life. In the event an exception is made, ABC Nonprofit only considers the naming of ABC Nonprofit as the exclusive irrevocable beneficiary of insurance policy(ies) purchased on the lives of the donors with gifts from donors if the insurance policy(ies) are owned by ABC Nonprofit. 4. ABC Nonprofit gives full recognition credit for the face value of a life insurance policy given to ABC Nonprofit if the policy is fully paid-up and the insured is age 55 or older. ABC Nonprofit reserves the right to determine what constitutes fully paid-up policy status. 5. ABC Nonprofit must be named as both beneficiary and irrevocable owner of an insurance policy before a life insurance policy can be recorded as a gift. The gift is valued at its cash surrender value upon receipt. If the donor contributes future premium payments, ABC Nonprofit includes the entire amount of the additional premium payment as a gift in the year it is made. 6. If a policy is not fully paid up and the donor does not elect to continue making gifts to cover premium payments on the life insurance policy, ABC Nonprofit may: I. Bequests a. Continue to pay the premiums; b. Convert the policy to paid-up insurance; or c. Surrender the policy for its current cash value. 1. A bequest is a gift of any amount or form made to ABC Nonprofit in a donor s will. Bequests may provide for a specific dollar amount in cash, specific securities, or specific articles of tangible personal property. 2. ABC Nonprofit is pleased to be named as a charitable beneficiary in a donor s will. Donors may make bequest provisions that name ABC Nonprofit as any of the following:

34 a. Sole beneficiary; b. Beneficiary of a portion of the estate (e.g., 30%, 50%, etc.); c. Beneficiary of the remainder of an estate or a portion of the remainder of an estate after specific needs have been fulfilled; d. Beneficiary of a specific dollar legacy; or e. Contingent beneficiary. 3. Gifts can be made to ABC Nonprofit through the execution of a new will or through a codicil to an existing will. 4. Sample Language a. Unrestricted Bequest: I give and bequeath to ABC Nonprofit, Anytown, Pennsylvania, (the sum of $ ) or ( % of the residue and remainder of my estate) or (property described herein) to be used for general purposes, as determined by the Board of Managers. b. Upon the donor s request, ABC Nonprofit can provide language to assist in establishing a restricted estate gift: This designation represents a preferred use for these funds and is not an absolute restriction. Should the exact designation cease to be effective or practicable before or after the gift is received by ABC Nonprofit, the Board of Managers is authorized to use this gift in an alternative way consistent with the general intent of this designation. i. Gifts received when ABC Nonprofit had no prior knowledge of the amount or nature of the gift are treated as if the language above had been included, unless legally impossible. J. Retirement Plan Beneficiary Designations 1. The easiest way for a donor to donate retirement plan assets is to designate ABC Nonprofit as a primary beneficiary. Donors can contact the administrator of their plan to receive the correct forms to sign. For 401(k)s, if a donor is married, the spouse must waive his or her right to survivor benefits from the plan. Donors can specify an amount or percentage of the retirement plan assets to be gifted to ABC Nonprofit. Donors can also designate ABC Nonprofit as the secondary beneficiary. An alternative is to have retirement plan assets transferred at death to a charitable remainder trust.

35 2. Retirement plan beneficiary designations and bequests are not recorded as gifts to ABC Nonprofit until the gift is irrevocable. Where the gift is irrevocable, but is not due until a future date, the present value of the gift is recorded at the time the gift becomes irrevocable. VIII. ENDOWMENT FUNDS A. Endowment funds are funds in which the donor has stipulated, as a condition of the gift, that the principal of the fund is to be maintained by ABC Nonprofit in perpetuity and only investment income and net appreciation may be expended for the general charitable purposes of ABC Nonprofit. B. Endowment fund income and net appreciation can be unrestricted or restricted by a donor for use in a particular program(s) or interest area(s) of ABC Nonprofit. C. Donors are encouraged to recognize that over the many years following the establishment of an endowment, the needs, policies, and circumstances of ABC Nonprofit can change in unforeseen ways. The Board of Managers must have the flexibility to make use of funds in the best interest of the institution and in accordance with donor interests and specifications. Thus, donors are advised to describe the specific purposes of their gifts as broadly as possible and to avoid detailed limitations and restrictions. Donors considering bequests for a specific purpose are encouraged to consult with the development & communications director. 1. Donors are encouraged to include descriptive language to the effect, if the Board of Managers determines that this use is no longer necessary or appropriate, members are authorized to direct the income or principal of the fund for another use agreed upon through a special resolution of the Board, with preference given for another use most in keeping with the original intent of the fund. D. Donors are encouraged to establish endowments that provide funding for areas of ongoing budgetary need. The CEO, CFO, development & communications director, and the gift acceptance committee reserve the right to decline gifts that do not meet this criteria. E. No endowment funds, named or otherwise, can be created for an amount less than $100,000, unless otherwise approved by the CFO. F. Endowment gifts are commingled in the long-term investment portfolio of ABC Nonprofit and adhere to the investment policy of ABC Nonprofit, as adopted by the Board of Managers. IX. RELATED ORGANIZATIONS

36 A. Support Groups 1. The Friends of ABC Nonprofit is a support group for ABC Nonprofit. 2. Additional support group organizations may be formed by ABC Nonprofit only with the approval of the Board of Managers. The purpose of any such group is to promote the mission, purpose, goals, and objectives of ABC Nonprofit. Support groups are not established as separately incorporated associations. 3. Support group organizations formed for fundraising purposes must have written operating rules and procedures, which are approved by ABC Nonprofit. Their operating rules and procedures must include the following text: a. Description of formal affiliation; b. Purposes; c. Membership requirements; d. Criteria for election of Board of Directors and officers; e. Duties and powers of Board members and officers; f. Committee descriptions; g. Meeting schedule; h. Procedures for receiving and disposing of funds and assets; i. Rules of order; j. Limitations on political activities; and k. Procedures for amendments. 3. Use of the ABC Nonprofit Name a. Support groups are to act only in the name of ABC Nonprofit. b. The development & communications director approves support groups use of the name ABC Nonprofit in communications. 4. The annual goals and objectives of each support group organization should be prepared in coordination and cooperation with ABC Nonprofit. Preparation of annual goals and objectives is defined and approved by the Board of Managers

37 of each support group and reported to the ABC Nonprofit Board of Managers for review and approval. 5. Control of Funds Raised and Held a. All funds raised and held by support groups are in the name of Bryn Mawr Terrace and are delivered to it upon receipt or following completion of the activity for which the funds were raised. b. Regular reports of the funds raised and held are made to the development committee.

38 Endowment Fund Policy Introduction: The Sxxxxxx Uxxxx Mxxxxxx Hxxxx Endowment Fund (hereafter the Fund) was established at the Annual Meeting in 2004 to provide a permanent fund invested and managed faithfully in perpetuity for the Sxxxxxx Uxxxx Mxxxxxx Hxxxx, UCC (hereafter the Church). The Fund and the Endowment Fund Committee (hereafter the Committee) are described in Article XI of the Church s By-Laws. The Endowment Fund Policy is described in this document and is comprised of a gift acceptance policy, an investment policy, and a spending policy. The Endowment Fund Policy must be reviewed at least every five (5) years by the Committee and be presented to the Church Council (hereafter the Council) for approval. I. Gift Acceptance Policy A. Introduction The Church is grateful for gifts offered by individuals, families, corporations and other legal entities to the Fund. Gifts may be unrestricted or donor restricted. All gifts accepted for the Fund will be recorded and acknowledged by the Committee. The members and the Council are ultimately responsible for all of the Church s material assets. B. Gifts of Financial Assets Unrestricted gifts of cash to the Fund are welcome and will be invested, managed, and spent according to the guidelines of this Policy. Unrestricted gifts of stocks, bonds, securities, or other non-cash financial assets will be accepted and managed in the best interest of the Church. The Committee, in conjunction with the Council, reserves the right to sell any gift of financial assets and to manage the cash value received from such sale in accordance with the Policy. C. Gifts of Real Estate or Property Unrestricted gifts of property or real estate may be accepted after careful study and appraisal by the Committee, in conjunction with the Council. This process will result in a determination whether acceptance of the gift is in the best interest of the Church and that the gift will not be unwieldy to manage and not place an undue encumbrance upon the Church. The Committee, in conjunction with the Council, reserves the right to sell at any time, gifts of property or real estate, if the sale of such a gift is determined to be in the best interest of the Church. The proceeds of such a sale will be added to the Fund. D. Restricted Gifts A restricted gift is any gift made to the Fund for a specific purpose, program, or project of the Church. The restrictions on the use of this gift are established in writing by the donor. Any restricted gift will be accepted only after the Committee, in consultation the Council, has determined that the purpose to which the gift is restricted is in the best

39 interest of Church. In the event that any restriction upon a gift becomes obsolete, inappropriate, or impractical, the Committee, in conjunction with the Council, and in compliance with Maine law, reserves the right to remove the restriction(s) on that gift. When restricted gifts are accepted after study by the Committee and Council, the donor will be notified that the restriction placed by the donor will be retained only until such time as the restriction becomes obsolete, inappropriate or impractical. If the donor does not wish this limitation to apply to their gift, the gift must be withdrawn. II. Investment Policy A. Responsibility of the Committee The Committee is charged with the management of the assets of the Fund. The Committee shall discharge its duties solely in the interest of the Fund. It will exercise its duties with the care, skill, prudence and diligence that a prudent investor would use in the conduct of a similar enterprise. The specific responsibilities of the Committee relating to the investment management of Fund assets include: 1. Determining the Fund s risk tolerance and investment horizon. 2. Establishing reasonable and consistent investment objectives, policies and guidelines which will direct the investment of the Fund s assets. C. Investment of Gifts Using good Christian and corporate stewardship, the principal of gifts received by the Fund shall be invested through designated entities to be held in trust for management and investment purposes. The assets of the Fund shall only be invested through entities that allow continued ownership of the assets by the Fund. D. Investment Objectives The Fund is to exist in perpetuity. The guiding principle for the Committee is to maintain the purchasing power of the Fund s assets. The Committee seeks to attain this goal by investing with emphasis on total return; that is, the aggregate return from capital appreciation and dividend and interest income. It is understood that the Fund may experience volatility of returns and fluctuations of market value. E. Investment Guidelines In most cases the Fund s assets are to be invested in liquid securities, defined as securities that can be transacted quickly and efficiently for the Fund with minimal impact on market price. Exceptions to this rule require Council permission.

40 Fund assets are to be invested or not invested in the financial instruments listed below: 1. Allowable instruments/transactions: a. Cash Equivalents Savings accounts Treasury Bills Money Market Funds Certificates of Deposit b. Fixed income Any type of investment under which the borrower/issuer is obliged to make payments of a fixed amount on a fixed schedule. An example would be if the borrower has to pay interest at a fixed rate once a year, and to repay the principal amount on maturity. These instruments include Government and Agency Securities and Corporate Notes and Bonds. c. Equity Securities Common Stocks d. Mutual Funds Mutual Funds which invest in securities and fixed income investments consistent with the Endowment Fund s investment objectives. 2. Prohibited instruments/transactions: a. Prohibited investments include, but are not limited to the following: Commodities and Futures Contracts Private Placements Limited Partnerships Venture Capital Investments b. Prohibited transactions include, but are not limited to the following: Short Selling Margin Transactions F. Investment Performance Review and Evaluation Performance reports shall be reviewed at least semi annually. The performance will be measured against commonly accepted performance benchmarks. Consideration shall be given to the extent to which the investment results are consistent with the investment objectives, goals, and guidelines as set forth in this statement. The Committee intends to evaluate the portfolio(s) over at least a three year period.

41 III. Spending Policy The Committee will determine annually if amounts are to be spent or granted from Fund assets. The Committee anticipates that any level of spending will permit maintenance of the Fund s purchasing power. Spending from the Fund shall be calculated on a Total Return Basis. Annually, as part of the budget preparation process, the Committee will calculate the average of the market value of the total portfolio at the end of the second quarter for the preceding 20 quarters. If the Committee has decided on spending from Fund assets, a percentage will be used of the resulting rolling average to determine the contribution made from the Fund to the Church s projected annual budget for the coming year. Since 2010, this percentage has ranged from 3.3 to 3.5 percent. The contribution from the Fund is made to the Church s annual budget.

42 Policies That Protect Gift Policy Gifts to churches come in many varieties and sizes. Some congregations enjoy the generosity of previous generations whose financial gifts have created sizable endowments, cemetery funds, and other economic legacies. Some congregations find themselves the recipients of even more tangible gifts, like cast-off sofas and appliances. Sometimes gifts are welcome; sometimes they create problems. Even windfalls of large cash gifts left in a congregant s will can surprise a church and even drive the congregation into conflict. A gift policy can help a church determine what kind of gifts it is willing to accept, under what terms, and how different gifts will be handled. A gift is generally defined as a voluntary transfer of personal property without consideration. The essential elements of a gift include 1. the competence of the donor 2. the intention of the donor to make a gift 3. the completed delivery of the gift 4. the acceptance of the gift by the donee In practice, most gifts are absolute and take effect immediately upon delivery of the property to the donee. Prior to agreeing to accept a gift, the governing body of the church should seek complete information about the gift, including the terms upon which the gift is being transferred and received the stated intent of the donor any conditions about conveyance any conditions or restrictions on the use of the donated property The church should also consider whether a gift is appropriate and relevant. If the church doesn t need a used couch, the governing body needs to be prepared to graciously decline the gift rather than allow the church building to become a repository of cast-off household goods. In addition, the governing body must determine whether a gift will entail expense, including repair or maintenance, potential liability, or additional insurance coverage. In other words, the church needs to ask itself, Can we afford to accept this gift? If the answer is No, the church again needs to be prepared to graciously decline the gift. Charitable Deductions Donors sometimes raise questions concerning the tax-deductibility of gifts to their church. Outright gifts of cash or property to the church will generate charitable deductions to the donor at the fair market value. The church should make a practice of acknowledging all gifts in writing, but should refrain from guaranteeing tax deductibility. Certain gifts also require submission of IRS forms. Make a practice of referring all donors to their tax professionals for a final determination of the deductibility of any gift. Gift Restrictions and Encumbrance Prudent recipients determine what restrictions, if any, are attached to a gift. Depending on the nature of the restrictions and the cost, difficulty, and willingness to enforce such restrictions, the church may choose to refuse the gift or request that the restrictions be removed. When accepting gifts of real property, it is important to consider if there are any mortgages or liens encumbering the property, as well as the costs of possible sale or maintenance and upkeep if the property is retained. Another potential liability in accepting real estate is the POL-20

43 Policies That Protect presence of building or housing code violations. One of the most significant problems involved in the acceptance of real estate is possible environmental hazards and liabilities on the gift property. Owners of property, even a church that has received a gift of real property, could become liable for cleanup costs and removal of any hazardous wastes on the site. An environmental audit or title insurance rider insuring against liability should always be obtained. Should the audit indicate that there might be hazardous waste contamination on the property, the best way to prevent potential liability is to exercise the right to disclaim the gift or bequest. Similarly, a church may wish to reject an offer to donate a heavily mortgaged property or property in serious disrepair. Right to Decline The UCC s Financial Development Ministry offers the following language as an example of a paragraph that might be included in a gift policy The [COMMITTEE] reserves the right to decline the acceptance of a particular gift due to its inappropriateness, restrictions placed upon it or potential financial or legal liability to the congregation. POL-21

44 Policies That Protect Endowment Policy Courtesy of First Church Of Christ In Longmeadow MA Statement Of Endowment & Investment Policy STATEMENT OF PURPOSE The guidelines in this policy are to be followed in the receipt, investment and distribution of financial gifts, bequests and contributions to The First Church of Christ in Longmeadow. The primary objective for the management of these gifts is to provide resources to further the mission of the Church, now and in the future. It is the intention of this policy that these gifts will be handled with care and prudence. As used in this statement of policy, endowment funds are funds whose principal is intended to be preserved indefinitely or until the occurrence of a specific event. The guidelines and instructions herein are intended to give flexibility to donors and to the custodian in establishing spending policies and in defining intended uses. By establishing a multiple fund strategy, the custodian and donors may establish funds with clear restrictions on spending and other funds with more flexible spending policies. They may establish funds that. will have no spending for a period of years, and funds that may be spent to exhaustion upon the occurrence of a specific event. Within the confines of this policy, there is flexibility for establishing a variety of uses for particular endowment funds. WHEREAS, it is the desire and intention of this congregation to provide resources for future generations. WHEREAS, the purpose of Endowment Funds is to enhance the unrestricted funds available for the programs, building maintenance, and mission of the Church, etc. BE IT RESOLVED, the following statements and policies shall govern the investment of existing funds and any new funds received or solicited by the Board of Trustees. I. INVESTMENT GOALS & OBJECTIVES FOR THE ENDOWMENT FUNDS The Endowment Funds shall be pooled for investment purposes. However, assets of other funds accepted by the Board of Trustees, and which are required by a donor s written instructions to be invested in separate investments, will be invested accordingly by the Board of Investment. The investments of these other funds may be included in the Endowment Funds, but separately identified with the donor names and their designated purposes. The Investment Goals and Objectives for the Endowment Funds shall be To invest the corpus of each fund within the Endowment Funds so that investment return may be used to maximize the goals and purposes of each fund as specified by the donor. To invest the pool so that the corpus of each fund is maintained in real dollars (the original gift plus an allowance for inflation). The overall financial objective of the Endowment Funds is to provide a level of support for Church programs as determined by the spending policy summarized below and to be consistent with maintain- POL-22

45 Policies That Protect ing or modestly increasing the purchasing power of the fund. The primary objective of investment is to provide a satisfactory return on investment for the support of the Church. Specifically, the investment target of the Endowment Funds is to attain an average annual real total return (net of investment management fees) of at least 8% over the long term. Nominal rate of return is the sum of capital appreciation (or loss) and current income (dividends and interest). Real total return is the nominal rate of return less the rate of inflation as measured by the Consumer Price Index (CPI). II. SPENDING POLICY The investment policy should be based on the assumption that annual spending over the long term will average 5% of the market value of the Endowment Funds for the previous 20 trailing calendar quarters. II. PORTFOLIO GUIDELINES To achieve its investment objective, the Endowment Funds will be managed in manner consistent with prudent investing for endowment funds. The goal for portfolio mixture in a normal investment environment will be about a 70/30 ratio of equity to fixed income investments. Further, the Endowment Funds shall be managed on the Total Return Basis and in accordance with the Annotated Laws of Massachusetts, Title XXII, Chapter 180A, Uniform Management of Institutional Funds. Approximately 50 70% of the Endowment Funds may be allocated to equities and 50 30% to fixed income investments. It is recognized that the equity portion of the pool entails the assumption of greater market variability and risk. The Endowment Funds will be diversified both by asset class (equities, bonds, cash equivalents) and within asset classes (within equities by economic sector, industry, quality, and size) to have reasonable assurance that no single security or class of securities will have a disproportionate impact on the total Endowment Funds. Investments in any one security will be limited at the time of purchase to 10% of the market value of the equities of the Endowment Funds when the security is purchased. No single major industry shall represent more than 10% of the market value of the Funds. The investment performance of the Endowment Funds will be measured and compared to various market indices and the results of the annual review will be reported to the Trustees. This annual report will be prepared by the Board of Investment, comparing the total return of the Endowment Funds to major indices such as the Barclays Government/Corporate Bond Index, the Standard & Poor s 500 stock index and, in the case of international equity funds, the EAFE stock index and the Consumer Price Index. In meeting its objectives, the Endowment Funds shall be conducted in accordance with the following guidelines The investment managers shall have full discretionary authority in the selection and retention of investments, subject to law and the statement of investment policy as it may be amended from time to time and subject to the following restrictions a. Securities may not be purchased on margin. b. Securities may not be sold short. POL-23

46 Policies That Protect c. Options (e.g. puts, calls) may not be sold short. Options use is limited to covered call writing, a conservative strategy. d. No investments are to be made in commodity contracts. Securities restricted as to public resales under the Securities Act of 1933 may not be purchased. The average quality of the fixed income securities (including mutual funds) in the endowment shall be at least A or better, and minimum quality for any issue held shall be BBB. The Endowment Funds of the Church may not be pledged as collateral or security for loans made by the Church without the approval of two-thirds of those in attendance at a duly called meeting of the Church which shall be at least two weeks following a hearing on the matter. IV. POLICY ON ENDOWMENTS, BEQUESTS & OTHER ENDURING GIFTS DEFINITION OF TERMS Unrestricted Gift Moneys or other property given to the Church which may be used for any Church purpose or expenditure. Restricted Gift Money or other property given to the Church which may be used only for a particular purpose as specified by the donor. Income The earnings received from a direct gift, to include the interest, dividends, and net appreciation, realized and unrealized, in the market value of the assets of a gift fund over the historic dollar value of the fund (as defined in Massachusetts General Laws, Chapter 180 A. A net loss, realized or unrealized, will result in a reduction of income. RECEIPT OF GIFTS Types of Gifts Gifts of an enduring nature may be given to the Church directly or as bequests, in such forms as wills, charitable remainder trusts, life income agreements, assignment of life insurance, transfers of property (cash, stocks, bonds, real estate, personal property), memorial gifts, or through other governing documents. Gifts may be in the form of unrestricted or restricted gifts or endowments. Acceptance of Gifts The Board of Trustees shall have the responsibility for the acceptance or rejection of all gifts. Gifts which are unwieldy to manage or not in keeping with the Christian mission of the Church will be carefully reviewed and may be declined by the Board of Trustees. Properties transferred to the church will generally be sold promptly and the proceeds placed with our investment managers. Unrestricted gift proceeds will be allocated equally in the four Permanent Endowment Funds of the Church as described in the By-laws, Article VIII A and B1, 2 & 3. V. ADMINISTRATION a. In accordance with the By-laws of the Church, the Board of Trustees is responsible for all of our assets, real and personal. b. All investable funds are delegated to the Investment Committee which oversees and is in regular communication with the professional money managers on at least a quarterly basis. POL-24

47 Policies That Protect c. Having made a good faith effort to comply with the terms of this policy, the Trustees, the Investment Committee or other delegated persons or parties, shall be released from liabilities incurred in such a good faith effort. Individual Trustees shall not be liable for the acts or omissions of any other Trustee. Any member having a direct or indirect personal interest in any dealings or transactions involving these funds shall refrain, at all times, from any conduct in which personal interests would conflict with the interest of the Church. REPORTING GUIDELINES The status of all gift funds will be reported at the Annual Meeting. SPENDlNG FROM THE ENDOWMENT Annually Spending from the endowments shall be on the Total Return basis. Each year, as part of the budget preparation process, the market value of the total portfolio (including the annual yield) for the preceding five years (20 quarters) shall be averaged. The five-year average is then multiplied by 5% to determine the total maximum distribution from the endowments for the coming year. Long-term Capital expenditures requiring financing from the Endowment Funds will require a two-thirds vote from a regular or specially called meeting of the congregation. Emergency The Board of Trustees is granted the authority to, spend up to 7% of the total value of the General of the Building and Maintenance Endowment Funds for emergencies of the Church that require immediate response. Such extra expenditures shall be reported to the Church Council at their next regular meeting. ENDOWMENT FUNDS The Church, in its endeavors to carry out its purposes in the spirit of its faith and covenant, shall seek to establish and maintain certain Special Funds, namely General Endowment This fund consists of all existing funds prior to 1981 and are under the general domain of the trustees for the general purposes of the church. Building And Maintenance Fund It is the primary purpose of this fund to provide funds for expenditures which do not recur annually, or to meet emergencies having to do with the church buildings, their improvement, preservation, and maintenance in ways not provided for otherwise. Payments from the income of this fund may be made upon the vote in favor of twothirds of the members of the Board of Trustees present at a meeting duly held, or upon the vote in favor with a majority of the members of the church present and voting, at meeting duly held. Payments from principal may be made the vote in favor of two-thirds of the members of the church present and voting, at a meeting duly held. Mission Fund The purpose of this fund include not only Home and Foreign Missions as understood historically, but also endeavors to meet human needs wherever such needs be found. The Board of Mission and Social Concern shall make recommendations to the Church, from time to time, concerning the use of this fund, through the church calendar or the Church on the Green. Payments from the income of this fund may be made upon the vote in favor of twothirds of the members of the Board of Mission and Social Concern at a meeting duly held, POL-25

48 Policies That Protect or upon the vote in favor of a majority of the members of the church present and voting, at a meeting duly held. Payments from principal may be made upon the vote in favor of twothirds of the members of the church present and voting, at a meeting duly held. People & Programs Fund It is the purpose of this fund to promote the programs of the church in service to its members and the community. The Board of Deacons shall make recommendations from time to time concerning the use of this Fund, either through the Church calendar or the Church on the Green. Payments from the income of this fund may be made upon the vote in favor of twothirds of the members of the Board of Deacons present at a meeting duly held, or upon vote in favor of a majority of the members of the church, present and voting, at a meeting duly held. Payments from principal may be made upon the vote in favor of two-thirds of the members of the church present and voting, at a meeting duly held. DEFINITIONS TRADITIONAL DEFINITIONS Income Interest and dividends paid from investments of principal in savings, bonds and stocks. Principal Amount of money to be invested which then generates income. Appreciation Increase in the value of principal realized through investing in capital assets such as stock in a company whose management is able to increase the worth of the company for the investor stockholders. Budget Line Endowments The addition to Church revenue income earned on investments. MODERN DEFINITIONS Earnings Traditional income plus capital appreciation, when taken together, is known as Total Return on investments. Earnings include interest, dividends and appreciation. Since 1991, interest and dividends have remained fairly level, while the appreciation or stock values has increased at an incredible pace. Spending Rule A discipline whereby a reasonably conservative percentage of the market value of the principal of the endowment is withdrawn annually for current budgetary needs leaving the balance plus a share of the annual appreciation in the fund for continued investment and management. If average annual appreciation was 13.43%, a spending rule set at 5% would leave on average 8.43% in the fund for future investment and growth. POL-26