by Robert Evans and Avrum Lapin
On February 2nd, Netflix made available for streaming the hotly anticipated second season of its high wire political drama “House of Cards.” Reportedly, President Obama was so excited to see the new episodes that, in December, he asked Netflix CEO Reed Hastings for a sneak peak. For those who have not tuned in, the show revolves around the exploits of a Machiavellian fictional congressman from South Carolina, Frank Underwood. Believe it or not, one of the more interesting, reflective episodes from the first season revolved around a building naming gift. Underwood visited his alma mater, The Citadel, for the opening of a library named in his honor. It’s made clear that the politico made a generous financial contribution. The episode showed the politician pausing ever-so-briefly from his relentless pursuit of power to reflect on the passage of time and the role his alma mater played in shaping the man he became.
Forget about a building, for many donors, having a named plaque affixed to a wall can provide an equally emotional moment, one that conjures memories of relatives passed on or of memories of a long relationship with a particular charity. But any time money and emotions enter the picture, fears of “smoke filled rooms” and special deals abound.
It is precisely because of the emotion, and the dollars involved, that nonprofits ranging from colleges and hospitals to community and faith based institutions should maintain clear and consistent gift acceptance policies, especially when it comes to gifts involving naming rights.
In our work in the field, we have continued to be astounded to discover how few charitable organizations – especially many of those conducting major fundraising efforts – bother to adopt or operationalize formal gift acceptance policies. And a casual search of the internet reveals some, but not a lot of discussion of nonprofit gift acceptance policies. In fact, since we first addressed this topic in a 2010 eJewish Philanthropy post, it seems precious little has changed, especially in the Jewish community.
Particularly with regard to faith based organizations, including synagogues, there seems to be a prevailing attitude that ‘we trust our donors’ and ‘we take our donations in faith.’ But even organizations that are in the faith “business” should use some concrete guidelines to protect themselves and their donors to avoid hurt feelings and misunderstandings, or in a worst case scenario, a lawsuit. For it is guidelines, and not faith, that prevent mishaps.
Key gift acceptance questions that nonprofits must address include:
- When it comes to gifts that involve recognition in the form of a plaque on a room or naming all or part of a building, just what percentage of the pledge needs to be paid in order for the public recognition to happen? Are we talking 60 percent, 85 percent, 100 percent? The answer is not as important as the need to have a board-directed policy in place, one that makes the process clear to the staffer or volunteer doing the soliciting as well as the donor. (By the way, we typically recommend at least 60 percent.)
- What might happen if a particular nonprofit ever merges or dissolves? Do donors who, say, had a room named after a family member, have a right to stipulate in the gift agreement that all or part of a donation go to another charity if the initial nonprofit folds? It is not so far-fetched: A dispute of this sort several years ago led to a lawsuit involving a Pennsylvania synagogue that was settled out of court.
- Will nonprofits accept non cash gifts, including stocks and securities (which most accept and sell) or real estate or even automobiles – which may turn out to be difficult to sell and more trouble than they are worth? There is also the question of whether or not to accept services like the installation of new air conditioning equipment and whether or not such work would be given “campaign credits.”
Other questions to consider include: What is the minimum age that an organization wishes to accept charitable gift annuities? Another interesting question: Can unrelated donors merge their gifts to receive “campaign credit” for special naming opportunities? In this case, if the answer is yes, we’d strongly advise requiring payment-in-full before public recognition is given.
We don’t like to think of substantial charitable gifts as transactions in the business sense and certainly don’t advise that nonprofits present or consider them as such. But still, it is incumbent upon responsible nonprofits to implement clear, standard and “enforceable” gift acceptance policies. After all, you never know what can happen. It is possible that, at some point in the “House of Cards” series, Congressman Underwood could get caught up in some kind of campaign finance scandal, and the library donation could be called into question. When it comes to the real world, responsible charities and institutions that see themselves as trusted stewards of community dollars and confidence must prepare for all possibilities.
Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of The EHL Consulting Group, a fundraising consulting firm located in suburban Philadelphia. They are frequent contributors to eJewishPhilanthropy.com. The EHL Consulting Group is one of only 38 member firms of The Giving Institute. EHL Consulting works with dozens of nonprofits on fundraising, strategic planning, and nonprofit business practices and strategies. Learn more at ehlconsulting.com
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