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Not-for-Profit: Gift Acceptance: Implementing a GAP to Prevent a Gap

June 2014

The following was distributed as part of CohnReznick's The Not-for-Profit Advisor - Spring 2014 issue.

There are many reasons for a not-for-profit organization to have a gift acceptance policy (GAP). The most important reason to have a GAP is that it provides protection. How? A well written GAP offers structure and consistency regarding the types of gifts a not-for-profit organization can accept, and provides guidance on what to do when a gift is received. A GAP provides guidance in terms of which gifts may be rewarding and those that may be unfavorable or create risk to the organization.  

While internal controls are important to protect the structure of an organization, it is just as important to protect the organization’s assets and mission. What is the primary benefit of a GAP? Discipline. One of the most important revenue streams of a not-for-profit organization is its donor base. With a GAP, there could be situations where a donor wants to contribute an asset that may not fit the needs or mission of the non-profit organization. It is very enticing for any organization to be caught up in the moment when a donor offers a gift. Rejecting a gift oftentimes just does not feel right. However, if the gift is outside of the organization’s mission or creates risk, the correct answer may very well be “no.” Establishing discipline steers the organization in the right direction. The GAP should be tailored to the organization as no one GAP fits all organizations. A well-written GAP allows the organization to have flexibility in how it operates, yet establishes guidelines with donors. 

A GAP can help protect assets by guiding a not-for-profit organization on the types of gifts that can and cannot be accepted. As such, when not-for-profit organizations accept gifts that are outside of their mission and goals, the impact can be unfortunate, and sometimes disastrous, costing money to prepare it for sale – or worse – presenting unforeseen liabilities, such as environmental issues.

An Illustration

A great example of risky gift acceptance is a timeshare week. While the idea of utilizing a timeshare for a week as a fundraiser may sound very appealing, it could come with long-term costs. Timeshare weeks require an annual maintenance fee payment and, if an organization does not receive a contribution greater than the annual maintenance fee payment, the timeshare will end up being more of a liability than an asset. Having a GAP that specifically addresses these types of gifts – for example, by excluding a timeshare week as a gift that can be accepted – allows an organization to stay within policy, while not upsetting a potentially valuable donor.

Getting Started

One of the key things to remember is to consult with counsel when designing a GAP. While organizations can get some insight through their own research via the Internet or other sources, this approach will not protect the organization in all cases. What are the issues that should be considered when developing a GAP?

  • The GAP should be a shared effort of development, finance, program, management, and a committee or sub-committee of the Board. 
  • While working with counsel, consider the organization’s mission and objectives, and long-term strategies. 
  • The policy should also establish when both the organization and the donor should engage the services of counsel. 
  • In many cases, a GAP committee should be formed and used as needed by the organization. In instances where there is an ongoing fundraising campaign, this committee will be more active and necessary.
  • A GAP should specifically list what are considered to be acceptable assets for the organization, and should identify specific items that cannot be accepted. Any assets not listed in the GAP should go to a GAP committee for approval.

In many cases, the combination of the GAP committee and policy take the pressure off of the development department. Denying a donor their contribution can dramatically impact the not-for-profit organization’s relationship with the donor and their willingness to contribute in the future. Communicating with donors about the types of gifts that the organization can and cannot accept is much easier with the support and structure of a GAP. 

After the GAP is established, it is critical that it be reviewed on at least an annual basis. As the organization grows and changes, the GAP may require modifications with respect to the types of gifts that can be accepted, or the requirements surrounding those that are accepted.

What Does CohnReznick Think?
Implementing a GAP is essential for establishing structure and protecting the assets and mission of an organization. Every not-for-profit organization should develop a GAP – one that is tailored to the organization, allows for flexibility in how the organization operates, and establishes guidelines that are clearly communicated to donors.


For more information, please contact Kimberly Brandley, Partner, at 732-380-8618.

To learn more about CohnReznick’s Not-for-Profit Industry Practice, visit our webpage.

Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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