Not All Non-Profit Donations Are Created Equal

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Not all gifts or donations to non-profits are created equal.  In fact, there are certain cases where the non-profit may even consider not accepting the gift at all.  Gifts of real-estate, for example, may cause the non-profit to incur upfront costs to either maintain or sell the property that they do not currently have available.

One piece of advice to avoid these types of donations is to form a policy that outlines what donations your non-profit is willing to accept and the chain of command that donation approvals will have to follow.  It may also be prudent to form a gift approval committee that can review donations on a case to case basis.

Define a holding period for an illiquid gift, and establish in an additional cash gift from the donor is necessary to cover the carrying costs of the asset.  Define what is expected of the donor if the liquidation of the asset does not occur within the expected timeline. If there are certain types of assets the organization is not willing to accept, clearly identify them in the policy.

Accepting non-cash gifts can often cause complex tax issues.  We recommend setting a minimum gift amount.  This will ensure that any upfront expenses that the non-profit could incur will be covered.

For more advice regarding non-profit donations, click here.