- Example 1
- Example 2
- Example 3
3. [Name of Ministry] requires Board approval before accepting the following types of gifts:
- That are subject to indebtedness, where our ministry would have to fulfill the financial obligation
- That pass or could pass pre-existing liabilities to the ministry
- That generate Unrelated Business Income Tax
- That are owned in divided ownership interests without a clear partition agreement
- That are controversial
- That place undue burden on the ministry
“Controversial gift” means a gift that includes or could be construed to include assets generated by a business enterprise this is not missionally aligned or could create reputational harm to the ministry.
4. [Name of Ministry] will hold all agreements with donors and all information concerning donors and prospective donors in strict confidence, subject to legally authorized and enforceable requests for information by government agencies and courts. [Name of Ministry] will only release information concerning a donor if the donor agrees in writing to the release of such information.
5. [Name of Ministry] will seek the advice of legal counsel when appropriate. All legal documents will be reviewed by legal counsel prior to execution.
6. [Name of Ministry] will not provide legal, financial, or other counsel to or on behalf of donors or prospective donors. All information about potential gifts provided by [Name of Ministry] or its agents is for informational purposes only.
7. [Name of Ministry]'s staff encourages prospective donors to have the terms of all proposed agreements reviewed by their own legal and/or financial advisors.
8. [Name of Ministry] states that it is the donor's responsibility to obtain any necessary appraisals, file appropriate tax returns, and discuss any issues surrounding tax benefits with a licensed CPA or attorney.
9. [Name of Ministry] states that fees for preparation of legal documents, appraisals, tax returns, etc. are not the responsibility of [Name of Ministry]. [Name of Ministry] will generally pay normal fees associated with brokerage services appropriate to the service provided.
10. Prohibited payment of fees include:
- Finder’s fees for current or planned gifts
- Investment or administrative fees that in any way could be construed as compensation for a gift being made to [Name of Ministry] or for its benefit
11. [Name of Ministry]’s staff will not knowingly inflate the value of a gift above the true fair market value in order to provide a tax advantage to the donor.
USE OF GIFTS AND DONOR INTENT
Unless subject to an agreement between [Name of Ministry] and the donor to restrict the gift for a specific purpose, all gifts will be considered unrestricted and may be used for such purposes as the organization determines to be most appropriate.
[Name of Ministry] may elect to decline a current or planned gift if the donor’s intent or focus is beyond the scope of the church's mission and/or is not consistent with the church's funding priorities, or if any restriction would make the gift difficult or impossible to administer.
GENERAL GUIDELINES AND POLICIES WITH RESPECT TO TYPES OF GIFTS
[Name of Ministry] will generally accept the following gifts:
- Outright Gifts of cash or marketable securities of any value. Real, tangible, or intangible gifts in accordance with the appraisal requirements below.
- Deferred Gifts of realized bequests, remainder interests in a charitable unitrust, paid-up whole life insurance policies (that name [Name of Ministry] as the owner and beneficiary and do not require any additional premiums to keep in force), and qualified retirement plan assets or other estate beneficiary designations.
- Additional gift possibilities should undergo a rigorous vetting process to determine the appropriateness, risk, and potential benefit of the gift.
Appraisal Requirements
Gifts of property, other than publicly traded securities, must be accompanied by an appraisal if the estimated value exceeds $5,000 and IRS Form 8283 for [Name of Ministry] to sign. A qualified independent appraiser, who cannot be associated with [Name of Ministry] or with any of its leadership, including the Board, or with the donor or donor’s family or business, must provide the appraisal. When the gift funds a specific recognition opportunity, donors agree to make up any shortfalls upon conversion to cash and the level of recognition the donation requires.
- Donors of property gifts must seek their own legal and tax counsel regarding all property gifts. [Name of Ministry] reserves the right to refuse gifts of property when it is determined that the donor has not complied with IRS appraisal requirements.
- Donors of personal property gifts will receive acknowledgement of the gift only when complete transfer has occurred. The acknowledgement will not include any reference to the value of the gift.
- All costs associated with obtaining a qualified appraisal will be the responsibility of the donor.
- The [ministry leadership position] is responsible for signing the donor’s IRS form 8283.
Valuing a Gift
- Cash: In cases where gifts are made in cash, the valuation is the amount of the cash.
- Publicly Traded Securities: Gifts of securities will be valued at the average market value (as determined by the mean of the high and low valuations of the security) on the date the full interest in the transferred property is transmitted or postmark date if mailed.
- Privately Held Securities: Gifts of closely held stock will be valued by a qualified independent appraisal at the time of transfer. Generally, gifts of privately held securities will be accepted only when a liquidation plan is in place.
- Real Property: Gifts of real property will be reported based on the appraised value as of the date of the gift as determined by a qualified independent appraiser within 60 days prior to the date of transfer or before the donor files a tax return for the year in which the gift occurs.
- Life Insurance: Gifts of life insurance will be valued for recognition purposes, based on the interpolated terminal reserve (roughly the surrender value) as determined by an independent appraiser at the time of transfer.
- Gifts-In-Kind: Gifts-in-kind are tangible gifts other than cash, marketable or privately held securities, or real property. Gifts valued at more than $5,000 require an independent appraisal to document value. Gifts-in-kind of an undetermined value will be recorded at zero dollars ($.00) and acknowledged as received with no value stated.
NOTE: All valuations should be based upon IRS Rules & Regulations in effect at the time of the gift.
TYPES OF GIFTS ACCEPTED
Cash and Pledges
[Name of Ministry] will accept gifts in the form of cash, check, or credit card, or other electronic transfer mechanisms, regardless of the amount. Checks shall only be made payable to [Name of Ministry].
A pledge can be made to [Name of Ministry] by an individual, corporation, or foundation. Pledges may be made in single or multiple installments. Gifts intended to be made over several years should be evidenced in writing, together with a written timetable acknowledging how and when the donor intends to make the gift.
Deferred Gifts
[Name of Ministry] encourages and welcomes estate and planned gifts. In working with donors who have an interest in a planned giving vehicle, [Name of Ministry] may use a planned giving consultant for advice, direction, and help in preparing the necessary samples and proposals to encourage the donor to make the gift or facilitate the transfer process.
Donors should engage their own advisors and legal counsel to ensure the vehicle matches their personal, estate, and philanthropic intent. Donors who choose to honor [Name of Ministry] in this way may be recognized through [Name of Ministry]’s planned giving recognition publications and events.
Bequests
Bequests of all kinds (fixed or percentage, residual, contingent, or testamentary trusts) are welcome, though [Name of Ministry] may decline gifts from the estates of deceased donors if the gift is not acceptable for any reason. [Name of Ministry] will not act as an executor or personal representative of a donor’s estate.
- All bequests should be made in the name of “The Board of [Trustees/Regents/Directors] on behalf of [Name of Ministry].
- [Name of Ministry] staff members will attempt to identify bequest expectancies whenever possible in order to avoid gift arrangements that do not conform to these policy guidelines, as well as to identify any desired restrictions from the donor on the use of funds. [Name of Ministry] reserves the right to disclaim bequeathed gifts if they do not conform to these policy guidelines for outright gifts.
- Representatives of [Name of Ministry] will not prepare wills for donors.
- Any property given to [Name of Ministry] via bequest will be liquidated following settlement of the estate. Unrestricted bequests will be placed in [Name of Ministry]’s endowment.
- Life Income Plans (charitable remainder annuity trusts, charitable remainder unitrusts, and charitable lead trusts)
- The donor must choose the trustee of any charitable trust, which cannot be [Name of Ministry], and must pay any expenses related to the trust.
[Name of Ministry] accepts the following planned gifts:
- Charitable Remainder Unitrusts (CRUT): These trusts pay income to beneficiaries on a fixed percentage of trust assets, revalued each year, based on the trust’s fair market value (no less than and most commonly 5%).
- Charitable Gift Annuity: This type of annuity allows donors to make a gift to the ministry in exchange for fixed payments for life. The amount of the annuity will be determined at the time of the gift and based on established rates.
- Charitable Remainder Annuity Trusts (CRAT): These trusts provide fixed payments in the form of an annuity. The payments are determined as a percentage of the value of the assets contributed. Once established, more assets cannot be contributed.
- Charitable Lead Trusts (CLT): This trust arrangement provides an income payment to [Name of Ministry] at some designated rate for the donor’s life or over a pre-established term of years. At the conclusion of the payment period, the assets are returned either to the donor or to someone designated by the donor. Tax consequences differ depending on the designation of income. [Name of Ministry] will not serve as a trustee of a CLT.
- Life Insurance Beneficiary: [Name of Ministry] encourages gifts of paid-up whole life insurance policies. Under most circumstances, [Name of Ministry] will not accept a life insurance policy with premiums owed. [Name of Ministry] also encourages donors to designate [Name of Ministry] as a percentage beneficiary of a life insurance policy owned by the donor or as a contingent beneficiary of the policy.
Gifts of Qualified Retirement Plans
[Name of Ministry] encourages gifts of qualified retirement plan assets. Examples of such a plan might be an individual retirement account (IRA), 401(k), 403(b), simplified employer pension plan (SEP), or a profit-sharing plan.
- [Name of Ministry] recognizes that, under current law, qualified plans and IRAs may produce more attractive tax benefits as a gift at the death of the owner of the plan than as an inter vivos gift. This type of gift is most often made by naming [Name of Ministry] as the beneficiary (or partial beneficiary) of the plan or IRA or of naming [Name of Ministry] as a remainder beneficiary of a charitable trust created by retirement plan assets at the time of the donor’s death. In this way, the beneficial ownership of the plan or IRA passes from the participant to [Name of Ministry] (or, in the case of a testamentary trust, from the participant to the trust and subsequently to [Name of Ministry]) at the participant’s death. The tax-exempt nature of the school may affect whether income tax is payable upon the distribution. Refer to Internal Revenue Service Form 990 instructions for information about tax filing requirements.
- Any beneficiary designation is subject to the terms of the plan and the prevailing tax laws. Qualified plans and IRA’s are subject to an array of legislation and regulations, unlike other assets, and [Name of Ministry] encourages donors who might consider such gifts to consult with their tax and financial advisors. [Name of Ministry] also retains the right to consult with a prospect’s financial advisors in consideration of a gift of this type.
Qualified Charitable Distributions from IRAs
Current law permits a direct tax-free transfer from a qualified IRA to a qualified charity for up to $100,000 each year by anyone over age 70 ½. [Name of Ministry] encourages such gifts. If the gift is unrestricted and intended for annual support, the donor will receive [Name of Ministry] Fund recognition for the gift even though the donor receives no income tax deduction for the transfer. If the donor is age 72, he or she also may not have to recognize the distribution as taxable income and is credited to the donor in lieu of a Required Minimum Distribution. Refer to Internal Revenue Service publication 590-B for specific information about qualified charitable distributions from IRAs.
Gifts from Donor Advised Funds
[Name of Ministry] encourages gifts from a Donor Advised Fund (DAF). A donor advised fund is a separately identified fund or account that is maintained and operated by [Name of Ministry]. Each account fund is composed of contributions made by individual donors. Once the donor makes the contribution, [Name of Ministry] has legal control over it. However, the donor, or the donor's representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account. Since the donor received an income tax deduction for the initial transfer to the DAF, he/she receives no further tax deduction for the transfer to [Name of Ministry], but will receive [Name of Ministry] “acknowledgement” in the Annual reports.
Securities and Bonds
[Name of Ministry] accepts gifts of publicly traded stock. Such gifts should be subject to due diligence, and a plan of liquidation should be carefully considered (although [Name of Ministry] refrains from obligating itself to liquidate the stock in a specific way prior to acceptance.
In most instances, [Name of Ministry] will instruct its broker immediately to sell gifts of marketable securities. Exceptions may be made when the security in question is traded thinly and/or when an untimely sale of stock in bulk might adversely affect the price.
Non-publicly traded securities and other properties should be liquidated at the earliest possible time, keeping in mind market impact as well as other conditions and circumstances relating to such gift. [Name of Ministry] can also hold privately held securities for a period of time as an investment if the [Name of Ministry]’s investment counsel recommend. The staff of [Name of Ministry], shall have the ultimate responsibility for instructing its broker to liquidate such assets.
[Name of Ministry] also recognizes that transferring mutual fund shares is a more complicated process than transferring publicly traded stock, and, therefore, will generally only accept gifts of mutual fund shares that exceed $5,000 in value.
Real Estate
[Name of Ministry] will consider gifts of real property, both improved and unimproved (e.g., detached single-family residences, vacation homes, condominiums, apartment buildings, rental property, commercial property, farms, acreage, etc.), only after a thorough review as set forth below. These guidelines apply only to gifts of real estate located in the United States. [Name of Ministry] may consider such gifts located abroad under special circumstances, recognizing that the legal parameters for transferring and owning real estate in countries other than the United States vary considerably.
Prior to accepting a gift of real estate, a representative of [Name of Ministry] will physically visit and inspect the property. This visit may also include consulting real estate professionals familiar with and knowledgeable about the property in question and the real estate market in the area in which the property is located.
Prior to accepting a gift of real estate, [Name of Ministry] will conduct an analysis of the gift transaction with outside professionals, including real estate counsel. The analysis should include the costs of insuring, maintaining, and liquidating the property, as well as the potential revenue stream or sale proceeds derived from the property. This analysis should also determine the maximum exposure [Name of Ministry] might incur and the level of risk that is associated with the receipt, ownership, and eventual sale of the property.
Under normal circumstances, [Name of School] will not accept outright gifts of real property with a present fair market value of less than $100,000.
Gifts-In-Kind
[Name of Ministry] may choose to accept gifts-in-kind after a review determines that the school can sell the property or use the property to support its education or research. If [Name of School] sells or disposes of the property within three years of receiving the gift, the school will file IRS Form 8282 and send a copy to the donor.
Additional Resources
- Sample Website Wording - Gift Acceptance Guidelines
- Handle With Care - Stewarding Resources eBook
Posted August 2022
This is sample policy wording only. Your organization is responsible for compliance with all applicable laws. Accordingly, this policy wording should not be used or adopted by your organization without first being reviewed and approved by a licensed attorney in your area. Brotherhood Mutual assumes no liability in preparation and distribution of this sample document.
