It’s a two-prong question all nonprofit organizations need to answer. First, what donor restrictions are nonprofits willing to accept? Donors have causes that are more important to them than others. Some donors care more about benevolence and some care about missions. Some donors care about education and restrict their donations to scholarships. Do nonprofit organizations want to sponsor a scholarship program? If not, don’t accept the donation. Accepting a restricted donation is an agreement by nonprofits to adhere to the terms of the restriction. Nonprofit organizations need to be proactive and identify what restrictions they are and are not willing to accept.
Second, what type of financial assets are nonprofits willing to accept? Will the nonprofit accept cash? Sure. Will the nonprofit accept bitcoin? Hum. Will the nonprofit accept shares in privately owned businesses or real estate? Maybe. Some of these assets come with hidden financial risks to nonprofits, such as environmental concerns from donated real estate or litigation against owners of a privately owned business. Nonprofit organizations need to be proactive and identify what financial assets they are and are not willing to accept.
Both of these questions can be answered by a nonprofit developing a gift acceptance policy. Get ahead of the donor discussion and make the gift acceptance policy known and available to donors. This is a good way to protect nonprofits from unwanted restrictions and assets that bring more risk than reward.
Need additional guidance? Contact Partner Rob Eby.