Principle 30

A charitable organization should adopt clear policies, based on its specific exempt purpose, to determine whether accepting a gift would compromise its ethics, financial circumstances, program focus, or other interests.

Some charitable contributions have the potential to create significant problems for an organization or a donor. Knowingly or not, contributors may ask a charity to disburse funds for illegal or unethical purposes, and other gifts may subject the organization to liability under environmental protection laws or other rules. Donors may also face adverse tax consequences if a charity is unable to use a gift of property in fulfilling its mission and must instead sell or otherwise dispose of the property soon after its receipt.

The policy should address how the organization will address relationships and sponsorship offers from businesses and other organizations to ensure that all communications with customers and prospective donors are clear and accurate, and that the terms of any payment to the charitable organization and any related tax consequences (such as payment of unrelated business income tax for advertising provided to the business sponsor) are clearly understood by both parties. The policy should discuss how contributions will be disclosed to the public and should stipulate that the organization will retain complete control over use of its name and logo and of all content related to a sponsored event or program activity. The board and staff leaders should also consider how affiliation with a particular business or product might affect the organization’s reputation with donors and the public.

A gift-acceptance policy provides some protection for the board and staff, as well as for potential donors, by outlining the rules and procedures by which an organization will evaluate whether it can accept a contribution even before an offer is actually made. The policy should make clear that the organization generally will not accept any non-cash gifts that are counter to or outside the scope of its mission and purpose, unless the item is intended for resale or would otherwise produce needed revenue. It should list any funding sources, types of contributions, or conditions that would prevent the organization from accepting a gift. Charities should also consider establishing rules and procedures for determining whether a gift is acceptable and should identify circumstances under which a review by legal counsel or other experts would be required before accepting a gift.