It’s never easy to say “no” to a generous donor. But a gift acceptance policy can make the decision and process easier. When you receive a personal gift from a friend or family member — even if it’s not something you particularly want — you accept the gift and thank the person. The same isn’t always true of gifts given to your not-for-profit.

a gift wrapped in brown paper tied with a pink bow to signify a gift acceptance policy for not-for-profit organizations

Why? There are many reasons, from space limitations to unsuitability to your mission. Gifts should be examined, and, possibly, refused.


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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here again with Nicole Riley, an Audit Senior Manager and one of the faces of the PKF Texas Not-for-Profit team. Nicole, welcome back to The Playbook.

Nicole: Thanks. Thanks for having me.

Jen: So, we’re touching on topics important to not-for-profits. Accounting departments and development departments are two really critical components of a not-for-profit organization. How do you facilitate cooperation between the two departments?

Nicole: As you mentioned, they really are critical components of an organization, and when they work together well it can really benefit an organization.


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Restricted gifts — or donations with conditions attached — can be difficult for not-for-profits to manage. Unlike unrestricted gifts, these donations can’t be poured into your general operating fund and be used where they’re most needed. Instead, restricted gifts generally are designated to fund a specific program or initiative, such as a building or scholarship fund.

It’s not only unethical, but dangerous, not to comply with a donor’s restrictions. If donors learn you’ve ignored their wishes, they can demand the money back and sue your organization. And your reputation will almost certainly take a hit. Rather than take that risk, try to encourage your donors to give with no strings attached.


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If you’re like many Americans, letters from your favorite charities have been appearing in your mailbox in recent weeks acknowledging your 2018 year-end donations. But what happens if you haven’t received such a letter — can you still claim an itemized deduction for the gift on your 2018 income tax return? It depends.

Basic Requirements
To support a charitable deduction, you need to comply with IRS substantiation requirements. This generally includes obtaining a contemporaneous written acknowledgment from the charity stating the amount of the donation, whether you received any goods or services in consideration for the donation, and the value of any such goods or services.


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Traditionally, Americans have supported charities not only for tax breaks and a vague sense of “giving back,” but also for a variety of other financial, emotional and social reasons. Understanding what motivates donors and how their motivations vary across demographic groups can help your not-for-profit more effectively reach and engage potential supporters.

Money Matters
Asset

Not-for-profits often struggle with valuing noncash and in-kind donations. Whether for record-keeping purposes or when helping donors understand proper valuation for their charitable tax deductions, the task isn’t easy. Although the amount that a donor can deduct generally is based on the donation’s fair market value (FMV), there’s no single formula for calculating it.

FMV

If you’re charitably inclined and you collect art, appreciated artwork can make one of the best charitable gifts from a tax perspective. In general, donating appreciated property is doubly beneficial because you can both enjoy a valuable tax deduction and avoid the capital gains taxes you’d owe if you sold the property. The extra benefit

Your not-for-profit probably already ensures that donors receive a receipt with information about claiming a charitable contribution deduction on their tax return. But your obligations may go further than that. For noncash donations, you might have responsibilities related to certain tax forms.

Form 8283 for Donors
When filing their tax returns, donors must attach Section