What does “appropriate fundraising policies” mean? While all nonprofit and charitable organizations in Canada depend on some form of fundraising, Imagine Canada recognizes that Canada’s nonprofit sector is incredibly diverse and that organizations have differing needs with regards to fundraising and fundraising policies. Level three organizations are required to have a gift acceptance policy, a policy on the treatment of restricted or designated gifts, and naming and endowment policies. In order to ensure the relevance of the organization’s fundraising policies, all boards are required to review their fundraising policies at least once every three years.
Why is it important for charitable and nonprofit organizations to have:
a. a gift acceptance policy – A gift acceptance policy presents guidelines that assist staff and volunteers when fundraising and accepting gifts on behalf of a charitable or nonprofit organization.1
Gift acceptance policies help organizations to:2
- fundraise and manage gifts received
- manage risks and comply with all legal obligations
- manage donor relations
- improve operations related to the administration of gifts by staff and volunteers
Gift acceptance policies should include:1
- The organization’s mission and the purpose of the gift acceptance policy
- Stipulations on when legal council should be sought
- Clear distinctions between the kinds of gifts that can be accepted by staff as opposed to those that require approval from leadership
- A list of the kinds of gift restrictions that are acceptable to the organization
- A statement describing the form and disposition of gifts accepted
- A description of how the organization administers gifts
- A description of the legal or professional services and fees that will be needed to complete the gift
- A statement describing how gifts will be reported, counted, and valued by the organization
- A description of the types of gifts that will not be accepted (for instance, some gifts-in-kind or gifts from certain industries)3
b. a policy on the treatment of restricted or designated gifts – Many donors wish to ensure that the funds they donate to a charity or nonprofit are used for a particular purpose, leading donors to place restrictions on the use of their gifts.4 Restricted or designated gifts must be used for the purposes for which they were donated unless the charity obtains legal authorization or permission from the donor or the donor’s legal designate.5 As such, restrictions create legal and administrative obligations for charities, which must be followed in order for the charity to remain in good standing with CRA and the community it serves.4 Your organization’s policy on the treatment of restricted or designated gifts provides a code of conduct related to the acceptance of restricted gifts and protects the organization from the potential legal consequences and/or undue administrative burden that could be incurred if it accepted a gift that included restrictions that were not in its best interests or that it would not be able to carry out due to its mission or strategic direction.
Before accepting a restricted or designated gift, organizations should consider whether:4
- The restrictions are compatible with the organization’s mission
- The organization has the capacity to make use of the gift given its restrictions
- Administrative requirements will not consume too many of the organization’s resources
As such, policies on the treatment of restricted or designated gifts should include:
- A stipulation that acceptance of any restricted gift be approved by senior management or by the board of directors4
- Advice on how the terms of the gift will be documented.4
- A stipulation that all agreements to accept a restricted gift be reviewed by a legal professional prior to acceptance of the gift.
c. a naming policy – Offering opportunities to high-level donors to associate their name with an aspect of your organization can inspire large gifts from individuals who desire public recognition.6 Associating donor names with your organization can also increase the credibility of a program and potentially attract other major donors to your cause.6 There are many opportunities to recognize donors through naming, and organizational policies governing this process will assist staff to communicate these opportunities to donors as well as to implement them when they receive significant contributions. It is important to remember that recognition mechanisms should not be changed or withdrawn arbitrarily once they are agreed upon.5 An organization’s donor recognition or gift acceptance policies can include stipulations on recognition time limits or procedures that will be followed if the original form of recognition becomes untenable in the future.5
d. an endowment policy – An endowment can be defined as: “[A] long term gift to a charity, normally to be held for at least ten years, that is either set aside for a particular purpose, such as a scholarship, or for the general charitable purposes of the charity. Some endowments are directed to be held in perpetuity, while others are to be held for a fixed number of years…Once the endowment period has expired (except where the donor directs that the endowment be held in perpetuity) the entire endowment can be disbursed by the charity.”
While endowments tend to be thought of as tools for large organizations, mid-sized organizations can benefit significantly from establishing an endowment, which can be used to secure the long-term financial stability of the organization. Organizations that do not have endowments could consider the threshold at which they would consider establishing one and could include this in their gift acceptance policy.
From "Accreditation Preparation Workbook Section C: Fundraising," Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.
- “Why You Need Gift Acceptance Policies: How Thoughtful Planning About Non-Cash Gifts Can Improve Your Donor Relationships,” Katherine Swank, Blackbaud, Inc., June 2008.
- “Considerations in Developing Gift Acceptance Policies,” Karen J Cooper, Carters Professional Corporation and Bruce R. Hill, Consultant at the 18th Annual National Canadian Association of Gift Planners Conference, April 14th 2011.
- Final point from Karen Alebon, Manager, Ethical Code Program at Imagine Canada, Personal communication November 2012.
- “Endowed and Restricted Gifts: What the Gift Planner Needs to Know,” Terrance S. Carter of Carter & Associates and M. Elena Hoffstein and Edgar A. Frechette of Fasken Martineau DuMoulin LLP, May 1st 2003.
- “Ethical Code Handbook,” Imagine Canada, February 2011.
- “Creating a Planned Giving Program: A Legacy Building Plan for Small to Medium Community Based Organizations,” Niagara Community Foundation, 2006.