What it means
A cash donation for general operations is usually simpler than a donated property, equipment or service with conditions. A donor may want the money spent on a specific programme, expect naming rights or offer an asset that costs more to maintain than it is worth to the organisation.
A gift acceptance policy gives staff a way to assess this before saying yes. Identify the donor and proposed gift, and record the terms in the donor's own words or agreement, checking whether the donor owns the asset and can transfer it.
For a restricted donation, determine whether the organisation can carry out the purpose and report on its use. Do not accept a restriction merely to secure the money and hope to renegotiate later.
Non-cash gifts need particular care, since a vehicle may require insurance, repairs and storage while a property may have environmental or title issues. An independent valuation or specialist review may be needed depending on the asset and applicable rules.
Avoid telling a donor what tax value they may claim unless qualified to do so under the relevant law. Decide who has authority to accept different gifts, because a routine small cash gift may be processed by staff while a large restricted gift or real estate may need board or committee review.
Record any conflicts of interest, conditions for use or return and the decision rationale. A polite refusal can protect both parties.
Once accepted, send an accurate acknowledgement and update accounting records, donor restrictions and custody. Acknowledging receipt is not the same as endorsing a claimed market value.
If the donor's conditions change, seek a documented amendment rather than quietly spending outside the agreed scope. For managers, gift acceptance links fundraising to programme capacity and financial stewardship.
It keeps a generous offer from becoming an unfunded obligation or a promise the organisation cannot honour.
In practice
Real-world examples.
Example
A literacy nonprofit accepts cash earmarked for books after confirming it can track spending on that programme. The finance team sets up a separate fund code for the money. It later reports to the donor on how the books were used.
Example
A donor offers an old van. The charity estimates repair, insurance and parking costs before deciding whether it would help its services. It declines politely when the running costs exceed the benefit and suggests a cash gift instead.
Example
A donor proposes a large gift only if a new centre carries a family name permanently. The board reviews whether it can make that promise. It asks its lawyer to check the naming terms before replying.
Formula
Calculation
Estimated net benefit of a non-cash gift = Usable value to organisation - Acceptance, maintenance, storage and disposal costs
Worked example. A fictional charity is offered equipment it could use instead of buying a new unit for $8,000. Transport and setup cost $1,000, maintenance expected in year one costs $1,500, and safe disposal later is estimated at $500.
- Estimated first-cycle net benefit = $8,000 - $1,000 - $1,500 - $500 = $5,000.
Now compare a donated van that would be worth $6,000 to the charity, but needs $2,500 a year of insurance, repairs and parking over three years. The running costs are 3 x $2,500 = $7,500, so the estimated net benefit is $6,000 - $7,500 = -$1,500, and the charity may reasonably decline.
This is a management comparison, not a formal appraisal, tax valuation or guarantee of future costs.Case study
Seen in the real world.
This illustrative and entirely fictional example follows Open Door Learning, an invented education charity. A business offered it 40 used laptops if the charity would put the donor's logo on every student screen for five years. Staff were excited because devices were needed, but the technology lead found that many laptops were close to replacement and the branding condition could conflict with school agreements. The charity calculated testing, battery and support costs and asked the donor whether the branding condition could be removed.
The donor agreed to a simpler acknowledgement. Open Door accepted only the usable devices after inspection and recorded what was received. The review delayed the thank-you note by a few days but avoided an obligation the charity could not keep. The charity's acceptance policy gave staff a respectful way to discuss conditions rather than making an improvised promise.
Watch out
Common mistakes.
- Assuming every free asset has positive value without checking repair, storage, insurance and disposal costs.
- Promising a restricted use or naming condition before checking whether the organisation can fulfil it.
- Issuing an acknowledgement that states a donor's unverified tax value as if the charity had appraised the gift.
Questions
People also ask.
Can a charity decline a donation?
Yes. It may be unsuitable because of restrictions, cost, condition or fit with its purpose. Follow the organisation's policy and applicable law.
Who values an in-kind gift?
The appropriate valuation method depends on the asset and jurisdiction. A specialist or independent appraisal may be needed; the charity should not invent a value for a donor's tax claim.
Can donor conditions be changed later?
Sometimes, with the right donor agreement and legal process. Do not assume an internal decision alone removes a restriction.
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