Saying no to a donation can be the right choice

Large charitable gifts have generated a lot of news – and controversy – recently. From named college buildings to major museum giving, we’re in the middle of a public conversation about how we align donations and investments with mission and values.

What we aren’t talking about enough during these debates is why saying no to a gift is sometimes a good thing.

Turning down a charitable gift seems counter-intuitive to any nonprofit organization, but in some cases, it can strengthen your mission, provide clarity to donors and the public about your work and ensure your reputation remains strong.

Saying no to a gift sometimes makes sense strategically, and ultimately financially, if the cost to accept the gift is too high.

Saying no can be a good thing. It illustrates alignment with the values the organization holds.

Many organizations have formal policies around gift acceptance that can provide much-needed guidance on how to kindly reject donations that can carry extraneous liabilities and obligations the organization is not ready to manage.

Generally, gift acceptance policies specifically govern charitable contributions and fundraising. Although a question about gift acceptance is on the IRS Form 990, there are no legal requirements for a policy. However, there are some generally accepted principles.

A gift acceptance policy should provide guidelines to aid the organization in evaluating the risks (including reputationally) as well as costs and benefits associated with a proposed gift before its acceptance. Boards of directors, staff and legal counsel should all be enlisted in crafting a carefully thought-out policy that helps avoid embarrassment, ill-feelings and unexpected burdens. This conversation is an important one for an organization to ensure alignment.

Policies should not only cover the acceptance and administration of gifts for the organization but offer specific guidance to donors and their advisers. A good policy is a best practice for strong relationships and clarity with donors, great governance and oversight as well as risk management.

When evaluating a gift, organizations should always examine whether the acceptance will compromise the core values of the organization, or whether it will further its mission, goals and objectives.

Some gifts can run counter the values of a nonprofit. Some gifts may even lead to legal or administrative obligations that the organization is not prepared to handle. Sometimes, the organization is simply not equipped for certain kinds of gifts.

A written policy can help manage those competing interests as well as the expectations of donors.

The most important time to have a written policy in place to work from is before you are presented with a gift that demands discussion. This can help ensure the lure of the funding doesn’t get in the way of clear decision making.

The best gift acceptance policies are formalized in writing and achieve three key objectives:

Establish guiding principles around gift acceptance
Explain what type of assets your organization will accept
Define the organization's role in administering the gift

Finally, don’t forget to outline any restrictions that donors will be allowed to place on gifts. Be clear about rights, transparency and other terms and conditions.

Getting ahead of a gift acceptance policy early can save organizations from potential heartburn down the road. It’s a best practice that will benefit any organization for the future.