On this date (March 12) in 1930, Mohandas Gandhi began his 24-day, 240 mile (387 kilometer) “Salt March” to the Indian village of Dandi (then called Navsari) as an act of non-violent civil disobedience to protest the salt tax levied by colonial Britain. Gandhi and his followers walked for 24 days, 10 miles per day. The Salt March helped to galvanize Indian resistance to British rule and introduced the world to Gandhi’s commitment to nonviolence. This all helped to lay the groundwork for India’s independence in 1947.
The Salt March was hard, exhausting, and dangerous.
Your nonprofit needs an Investment Policy. It needs commitment because it too is hard. But surely nothing like the bravery and discipline shown by Gandhi and his followers. So buckle up, read this post, learn about the need for an Investment Policy, and then follow through by contacting me to get started. (My email is gordon@gordonfischerlawfirm.com).
Introduction to an Investment Policy
Does your fave nonprofit have an Investment Policy? Sn Investment Policy is vital for every nonprofit, including yours! It doesn’t take a financial professional to realize that unregulated investing is at best, foolish, and at worst, utterly disastrous.
When we invest in something, we hope that the investment will accrue value over time. In fact, one important way that your organization’s Board of Directors can fulfill its fiduciary responsibility is through investing assets to further the nonprofit’s goals. But investing can be risky. That’s why it’s important that your nonprofit educate and protect itself by establishing an Investment Policy.
What is an Investment Policy?
Investments can be a useful way to grow value and support the mission of a nonprofit organization. But investments don’t always work in an investor’s best interest. In fact, some level of risk is inherent in most investments. An Investment Policy is a set of guidelines or procedures that will help your organization determine and manage how it invests its resources. And, just as importantly, an Investment Policy clarifies why your organization invests its resources the way it does.
An Investment Policy should regulate, at minimum, who is accountable for investment decisions, what kinds of investments are acceptable, and how investments will be tracked.
A comprehensive Investment Policy should accomplish the following:
Communicate how your organization’s mission and vision will guide investment choices.
Determine who will be responsible for the various pieces of investment management.
Communicate clear objectives to all parties involved (Officers, Directors, independent contractors, donors, etc.).
Clarify the specific procedures for investment selection.
Confirm procedures related to the expenditure of investments; when and why you’re your organization’s investments be utilized or spent?
Identify the criteria against which the performance of investments will be measured.
Address risk (tolerance, management, and diversification).
Identify reporting and disclosure procedures and requirements.
Function as a written, objective guide for ongoing oversight of your investments.
Don’t worry, we’ll get into how soon! But first, let’s explore the following question:
Why is an Investment Policy Important?
An Investment Policy protects your organization from poor investment decisions. At that same time, it demonstrates your organization’s adherence to best practices to internal and external parties.
It does this by:
Providing guidelines for managing an organization’s financial resources effectively.
Laying out procedures to evaluate and manage risk.
Ensuring that investment decisions are aligned with the organization’s mission and objectives.
IRS Form 990
A well-written Investment Policy will come in handy when filing IRS Form 990 (the annual nonprofit filing required by the Internal Revenue Service). Form 990 includes several questions about investments and associated policies. These can be found in Part IV, Part VIII, Part X, and Part XI. Organizations must report details about their investment portfolios including the types of investments, the value of each investment, and any gains or losses. A well-defined Investment Policy should create streamlined and reliable processes for tracking investments. This will provide your organization with more accurate data come filing time and will make the filing process less daunting.
Endowment Funds
An Investment Policy is particularly important for organizations with endowed funds. In other words, funds in which the assets are intended to last in perpetuity and are required to support the organization’s programs and services over the long term. An Investment Policy can protect and preserve these critical resources.
Hopefully we’ve convinced you by this point that an Investment Policy is important. Let’s go deeper.
Who Is Responsible?
Who within your organization should be responsible for making investment decisions? How will decisions be reached? Who will be responsible for investment management and tracking? To answer these questions and avoid confusion, your nonprofit’s Investment Policy should clearly define roles and responsibilities. This will ensure consistency and accountability.
Your Fave Nonprofit’s Board of Directors
Your Board of Directors should be responsible for proper management of investments. It’s typically the Board’s job to provide consistent oversight and ensure that funds are being used prudently and effectively. This will include regular audits. The Board should also regularly review the performance of investment accounts. The Investment Policy itself should be reviewed at least quarterly by the Board and updated as needed.
Many nonprofit Boards choose to hire a professional financial advisor or investment manager to implement investments and offer advice. This person’s role can be accounted for in the Investment Policy.
Your Board may choose to appoint the Executive Director (or a similar employee) to actively monitor your organization’s investments day-to-day, and/or to serve as the primary point of contact for outside professional advisors who are assisting in the management of funds.
An Investment Committee may also be useful in order to further define and manage responsibilities.
We’re about to dive into HOW to make smart investment decisions!
How Should Investment Decisions Be Made?
When your organization makes investment decisions, it may wish to consider the following questions:
What is the purpose of our assets?
What are the general economic conditions?
What are the possible effects of inflation or deflation?
What are the tax consequences, if any, of our investment decisions or strategies?
What is the role that each investment plays within the overall investment portfolio?
What is the expected total return from the income and appreciation of investments?
What are the needs of our organization currently and what are our goals?
What is an asset’s special relationship or value, if any, to our organization’s purpose(s)?
The specific questions and their answers may vary dramatically based on the size and scope of your organization. But even smaller nonprofits will benefit from creating an investment framework which can grow and develop alongside them.
Goal and Asset Length
How will your Board determine which types of assets to invest in?
It’s especially important for your Board to consider short-, medium-, and long-term goals when investing. Different types of assets require different commitments and hold varying degrees of risk and flexibility.
For example, when your organization decides where and how to invest its money, it will need to consider if it will require quick access to the funds (short-term), if it’s saving up for something in a few years (medium-term), or it it’s investing for the distant future (long-term).
To do this effectively, your Board will need to be well-versed in various types of investments (stocks, bonds, real estate, endowments, etc.). Your Board will need to examine its finances, mission, and goals. It should then utilize that information to determine how best to diversify its funding throughout various types of investments. This is called asset allocation.
As a reminder, if your organization’s Board of Directors does not feel confident in its ability to analyze and distribute investment funds, it can hire a financial expert to consult and assist in this process.
And don’t forget to set goals for how your organization expects and hopes these investments will perform.
By considering these factors and more, your organization can create a streamlined set of processes in its Investment Policy. This will ensure a balanced investment plan that aligns with your organization’s financial objectives.
There’s one more important piece – monitoring and tracking! This will be especially useful when completing your organization’s annual Form 990. Let’s dive in.
How to Track Your Investments (Performance Monitoring, Measurements, and Review)
Are your investments meeting their objectives? It’s important for your nonprofit to regularly review and monitor investment performance. Financial markets and your nonprofit’s circumstances can change over time. This makes it especially important to periodically reassess your organization’s investment strategies. Your organization can then assess progress, adjust as needed, and communicate results to stakeholders.
Regular performance monitoring should involve tracking financial metrics such as return on investment (ROI), portfolio diversification, and risk-adjusted returns. Monitoring processes may also include full audits on a regular schedule. Consider outlining an audit schedule within your Investment Policy. As a reminder, it is your Board’s responsibility to facilitate audits.
Ensure your Investment Policy includes procedures that outline the monitoring, measurement, and review processes that your organization deems necessary to ensure your investments are meeting their objectives. Your Board of Directors is responsible for overseeing these regular reviews.
Conclusion
If your organization is interested in drafting (or revisiting!) its Investment Policy, don’t hesitate to reach out today to the Gordon Fischer Law Firm.
For the month of March, I’m offering a special to Iowa nonprofits. I will draft, revise, and edit, specific to the unique mission of your nonprofit, the ten (10) policies expressly referenced by the IRS on Form 990.
Questions about the ten (10) policies referenced on IRS Form 990?
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.png00Lexi Luneckashttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngLexi Luneckas2025-03-12 21:19:312025-03-12 21:20:47Gandhi’s Salt March and Why Your Favorite Organization Needs an Investment Policy
Born on this day in 1998, Amanda Gorman was just 22 years-old when she became the youngest
U.S. inaugural poet at the 2021 swearing-in of President Joe Biden. She has said that she drew inspiration for her poem, “The Hill We Climb,” from Abraham Lincoln, the Rev. Martin Luther King Jr., and poet Maya Angelou, who became the first woman to read a poem at a presidential inauguration in 1993.
Ahead of her reading, Oprah Winfrey gave Gorman a ring shaped like a birdcage in reference to Angelou’s, “I Know Why the Caged Bird Sings.” It was a thoughtful and generous gesture.
Nonprofits receive thoughtful and generous gifts, too.
Indeed, they rely on the generosity of the public to support their work. But did you know it’s sometimes wiser to “just say no” to a gift?
Not every gift comes from an “Angel Network”!
Knowing which donations to accept, and sometimes even better, which gifts to decline, is critically important for every nonprofit. That’s because some gifts, offered with the best intentions, can jeopardize a nonprofit’s reputation, create financial headaches, and even compromise its mission.
A well-drafted Gift Acceptance Policy (sometimes referred to as a “GAP”) can help a nonprofit avoid potential pitfalls, as well as establish procedures for accepting, tracking, and managing donations.
The IRS and GAPs
While the IRS doesn’t require a nonprofit to have a Gift Acceptance Policy, its Form 990 does ask that it be filed if available. (You’ll recall that IRS Form 990 is the “tax return” nonprofits must file every year). By expressly referencing the Gift Acceptance Policy on its Form 990, it’s clear the IRS considers adopting and following a GAP “best practice” for nonprofits — and a strong signal your nonprofit should adopt one if it hasn’t already.
Gone are the days when a nonprofit’s responsibilities were no more complicated than depositing checks or acknowledging a donor in a newsletter. Today, accepting and managing gifts is a more complicated undertaking that comes with heightened donor expectations, increased fiduciary obligations for Officers and Directors, and greater reporting requirements. Overall, a Gift Acceptance Policy provides necessary safeguards for both nonprofits and donors.
What IS a Gift Acceptance Policy, Anyway?
Broadly, a Gift Acceptance Policy describes the kinds of gifts a nonprofit will and will not accept and how they will be administered. Adopting a robust written policy regarding gift acceptance is an important part of nonprofit best practices that serve to instill fiduciary discipline, provide legal protection, and contribute to an organization’s long-term viability by ensuring that the nonprofit will not accept gifts that it does not have the time or resources to manage.
The process of developing and adopting a Gift Acceptance Policy also enables staff and boards to understand the complexities and challenges associated with certain kinds of gifts, focuses attention on donor stewardship, presents new opportunities for fundraising, and introduces clarity, control, and consistency into the nonprofit development program.
A case-by-case approach to accepting gifts—or having no policy whatsoever—can lead to poor decision-making by boards who might be tempted by a dazzling but wholly impracticable gift or blinded by their own tastes and personal opinions. Haphazard or arbitrary decisions can also confuse and frustrate potential donors, who are left wondering why their proffered gift was rejected.
Crafting and Adopting a Gift Acceptance Policy
A Gift Acceptance Policy is created through collaboration among a nonprofit’s Officers, Directors, staff, and legal counsel. Because each nonprofit is unique, it needs its own individual policy specific to its needs and mission and not one borrowed from another organization.
In addition to outlining its position on gifts, a Gift Acceptance Policy provides a roadmap for the Board of Directors and other fiduciary decision-makers. A clear and well-designed GAP also gives donors and prospective donors information they need for tax and other reporting purposes.
Approval by Board
Once drafted, the Gift Acceptance Policy must be approved and adopted by the nonprofit’s Board of Directors. Hopefully, a consensus of Directors can be reached on all issues addressed by the GAP.
Regular Reference and Review
The GAP should not be considered written in stone or simply left on a shelf to gather dust. The Gift Acceptance Policy should be readily consulted in any case of a non-cash or unusual gift.
More broadly, the GAP should be reviewed every year, at the least, to take into consideration any changes in the nonprofit’s circumstances, accommodate unexpected types of gifts, or reflect developments in tax law or technology.
Critical Elements of a Gift Acceptance Policy
A well-drafted Gift Acceptance Policy follows best practices in transparency, financial control, legal responsibility, and donor support. It should include the following elements:
The nonprofit’s mission statement;
The purpose of the Gift Acceptance Policy;
The use of legal counsel in matters relating to the acceptance of gifts;
The policy on restricted gifts;
The types of gifts the nonprofit will and will not accept;
Reporting requirements and responsibilities;
Gift Acceptance Committee (or another group, such as an Executive Committee, that is prepared to be consulted on gifts); and
Adherence to ethical standards and accountability.
Types of Gifts
Donors have a number of options when it comes to charitable giving. For nonprofits, though, not all gifts are created equal. Some gifts may be more costly or complex to manage than a nonprofit can handle, or the nature of a gift might fall outside its mission and goals.
A Gift Acceptance Policy needs to take into consideration all of the issues related to each of these types of gifts and provide clear and objective reasons the nonprofit can point to for accepting—or refusing—a gift.
Refusing Gifts
Refusing a gift is difficult for both a nonprofit and a donor. A Gift Acceptance Policy can help in this regard because it serves to manage the expectations of donors and guide the nonprofit’s decision-making. The reasons for turning down a gift are many and not always obvious.
There is still a mindset among many nonprofits that any donation is better than no donation. For new—or less sophisticated—nonprofits, turning down any gift can seem counterintuitive or even rude. That’s why a Gift Acceptance Policy that clearly sets out an organization’s position on gifts is in the best interest of every nonprofit, no matter its size or its mission. A strong GAP helps nonprofits “just say no” by delineating important strategic and financial reasons for accepting some gifts while rejecting others.
Donors Rights
If nothing else convinces a nonprofit that it must either adopt or revise its Gift Acceptance Policy, the specter of alienating existing donors or discouraging potential ones can often be the spur it needs. Building strong relationships with donors and enhancing donor retention are fundamental to any fundraising strategy and start with a formal Gift Acceptance Policy.
At minimum, a well-thought-out Gift Acceptance Policy assures donors they will receive timely and meaningful recognition. Further, the GAP can emphasis that donor intent will always be followed. After all, donors have a right to expect that their gift will be used as promised and consistent with their intentions.
Whether it is determining the criteria for naming rights for new building or deciding how to acknowledge a ten dollars ($10) check, a Gift Acceptance Policy helps to enhance and preserve donor relationships—especially when gifts are rejected. For example, if a nonprofit has a formal, written policy of rejecting, say, anonymous gifts, this makes it easier to explain to the donor why his or her anonymous donation cannot be accepted even though it might be generous—and tempting.
Conclusion
A Gift Acceptance Policy is critical for promoting charitable giving as well as limiting risk to nonprofits. They also help donors by providing clarity and enhancing transparency when deciding to make a gift. A GAP should be as integral to a nonprofit as professionally prepared employee and endowment policy handbooks, governing documents like articles and bylaws, and practices like board training.
Importantly, a Gift Acceptance Policy can make it easier for a nonprofit to say, “thanks, but no thanks” to a gift. And, who knows, it could mean the opportunity to say “yes” to an even better one.
Email Me!
If your organization is interested in adopting (or revisiting!) a Gift Acceptance Policy, please don’t hesitate to reach out to Gordon Fischer Law Firm.
For the month of March, I’m offering a special to Iowa nonprofits. I will draft, revise, and edit the ten (10) policies expressly referenced by the IRS on Form 990 (which of course includes a Gift Acceptance Policy) specific to the unique mission of your nonprofit.
Iowa native George Nissen built his first “tumbling device” in 1934 out of angle iron, canvas, and rubber springs. He perfected the contraption, renamed it the “trampoline,” after the Spanish word for springboard. On March 6, 1945, Nissen received a patent for the springy piece of equipment.
Nissen’s trampoline was used to train aviators in World War II and astronauts during the Space Age. Athletes still use it for cross-training and trampolining has become a competitive sport in itself.
The backyard trampoline with a safety net is as ubiquitous as the swing set and — even better — can be repurposed for other uses after the kids get tired of it. People have turned them into everything from chicken coops to greenhouses to sunshades.
You could say a Document Retention Policy is like a trampoline — it will always give you something good to fall back on. (Ouch!)
Seriously, though, nonprofits need a good Document Retention Policy to ensure all information related to their business operations, employees, and finances is managed in a systematic and well-organized manner.
A well-drafted Document Retention Policy sets guidelines for how long particular records and documents — both electronic and paper — must be kept and how and when they should be destroyed. It serves two primary functions. First, making sure your nonprofit meets federal and state legal and regulatory requirements. Second, and just as important, it protects the reputation, privacy, and interests of you and your employees.
It should include a description of each kind of document the Policy covers and the retention time for each, because these can vary. For example, bank statements should be kept for at least three (3) years. On the other hand, the IRS requires that year-end financial statements be kept permanently, while the minimum retention period for general correspondence is two (2) years.
The Policy must also provide detailed information about how to label and store paper documents and electronic files. There should be guidelines for backing up electronic files, as well as a secure method for purging this information.
Following the guidelines of a Document Retention Policy might seem rather time-consuming and nit-picky, but in reality it will improve the efficiency of your record management while at the same increasing the security of the sensitive information in your files.
If you’re dedicated to elevating your nonprofit to new heights, creating, implementing, and observing a Document Retention Policy is essential. (Double ouch!)
If your organization is interested in adopting (or revisiting!) a Document Retention Policy, please don’t hesitate to reach out to Gordon Fischer Law Firm.
For the month of March, I’m offering a special to Iowa nonprofits. I will draft, revise, and edit the ten (10) policies expressly referenced by the IRS on Form 990 (which of course includes a Document Retention Policy) specific to the unique mission of your nonprofit.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.png00Lexi Luneckashttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngLexi Luneckas2025-03-06 22:18:522025-03-06 22:18:52On March 6, 1945, Iowan George Nissen patents the trampoline
Iowa Nonprofits Need to Jump Into Adopting and Implementing a Flexible-But-Firm Document Retention Policy
Gandhi’s Salt March and Why Your Favorite Organization Needs an Investment Policy
NonprofitsMarch 12, 2025
On this date (March 12) in 1930, Mohandas Gandhi began his 24-day, 240 mile (387 kilometer) “Salt March” to the Indian village of Dandi (then called Navsari) as an act of non-violent civil disobedience to protest the salt tax levied by colonial Britain. Gandhi and his followers walked for 24 days, 10 miles per day. The Salt March helped to galvanize Indian resistance to British rule and introduced the world to Gandhi’s commitment to nonviolence. This all helped to lay the groundwork for India’s independence in 1947.
The Salt March was hard, exhausting, and dangerous.
Your nonprofit needs an Investment Policy. It needs commitment because it too is hard. But surely nothing like the bravery and discipline shown by Gandhi and his followers. So buckle up, read this post, learn about the need for an Investment Policy, and then follow through by contacting me to get started. (My email is gordon@gordonfischerlawfirm.com).
Introduction to an Investment Policy
Does your fave nonprofit have an Investment Policy? Sn Investment Policy is vital for every nonprofit, including yours! It doesn’t take a financial professional to realize that unregulated investing is at best, foolish, and at worst, utterly disastrous.
When we invest in something, we hope that the investment will accrue value over time. In fact, one important way that your organization’s Board of Directors can fulfill its fiduciary responsibility is through investing assets to further the nonprofit’s goals. But investing can be risky. That’s why it’s important that your nonprofit educate and protect itself by establishing an Investment Policy.
What is an Investment Policy?
Investments can be a useful way to grow value and support the mission of a nonprofit organization. But investments don’t always work in an investor’s best interest. In fact, some level of risk is inherent in most investments. An Investment Policy is a set of guidelines or procedures that will help your organization determine and manage how it invests its resources. And, just as importantly, an Investment Policy clarifies why your organization invests its resources the way it does.
An Investment Policy should regulate, at minimum, who is accountable for investment decisions, what kinds of investments are acceptable, and how investments will be tracked.
A comprehensive Investment Policy should accomplish the following:
Don’t worry, we’ll get into how soon! But first, let’s explore the following question:
Why is an Investment Policy Important?
An Investment Policy protects your organization from poor investment decisions. At that same time, it demonstrates your organization’s adherence to best practices to internal and external parties.
It does this by:
IRS Form 990
A well-written Investment Policy will come in handy when filing IRS Form 990 (the annual nonprofit filing required by the Internal Revenue Service). Form 990 includes several questions about investments and associated policies. These can be found in Part IV, Part VIII, Part X, and Part XI. Organizations must report details about their investment portfolios including the types of investments, the value of each investment, and any gains or losses. A well-defined Investment Policy should create streamlined and reliable processes for tracking investments. This will provide your organization with more accurate data come filing time and will make the filing process less daunting.
Endowment Funds
An Investment Policy is particularly important for organizations with endowed funds. In other words, funds in which the assets are intended to last in perpetuity and are required to support the organization’s programs and services over the long term. An Investment Policy can protect and preserve these critical resources.
Hopefully we’ve convinced you by this point that an Investment Policy is important. Let’s go deeper.
Who Is Responsible?
Who within your organization should be responsible for making investment decisions? How will decisions be reached? Who will be responsible for investment management and tracking? To answer these questions and avoid confusion, your nonprofit’s Investment Policy should clearly define roles and responsibilities. This will ensure consistency and accountability.
Your Fave Nonprofit’s Board of Directors
Your Board of Directors should be responsible for proper management of investments. It’s typically the Board’s job to provide consistent oversight and ensure that funds are being used prudently and effectively. This will include regular audits. The Board should also regularly review the performance of investment accounts. The Investment Policy itself should be reviewed at least quarterly by the Board and updated as needed.
Many nonprofit Boards choose to hire a professional financial advisor or investment manager to implement investments and offer advice. This person’s role can be accounted for in the Investment Policy.
Your Board may choose to appoint the Executive Director (or a similar employee) to actively monitor your organization’s investments day-to-day, and/or to serve as the primary point of contact for outside professional advisors who are assisting in the management of funds.
An Investment Committee may also be useful in order to further define and manage responsibilities.
We’re about to dive into HOW to make smart investment decisions!
How Should Investment Decisions Be Made?
When your organization makes investment decisions, it may wish to consider the following questions:
The specific questions and their answers may vary dramatically based on the size and scope of your organization. But even smaller nonprofits will benefit from creating an investment framework which can grow and develop alongside them.
Goal and Asset Length
How will your Board determine which types of assets to invest in?
It’s especially important for your Board to consider short-, medium-, and long-term goals when investing. Different types of assets require different commitments and hold varying degrees of risk and flexibility.
For example, when your organization decides where and how to invest its money, it will need to consider if it will require quick access to the funds (short-term), if it’s saving up for something in a few years (medium-term), or it it’s investing for the distant future (long-term).
To do this effectively, your Board will need to be well-versed in various types of investments (stocks, bonds, real estate, endowments, etc.). Your Board will need to examine its finances, mission, and goals. It should then utilize that information to determine how best to diversify its funding throughout various types of investments. This is called asset allocation.
As a reminder, if your organization’s Board of Directors does not feel confident in its ability to analyze and distribute investment funds, it can hire a financial expert to consult and assist in this process.
And don’t forget to set goals for how your organization expects and hopes these investments will perform.
By considering these factors and more, your organization can create a streamlined set of processes in its Investment Policy. This will ensure a balanced investment plan that aligns with your organization’s financial objectives.
There’s one more important piece – monitoring and tracking! This will be especially useful when completing your organization’s annual Form 990. Let’s dive in.
How to Track Your Investments (Performance Monitoring, Measurements, and Review)
Are your investments meeting their objectives? It’s important for your nonprofit to regularly review and monitor investment performance. Financial markets and your nonprofit’s circumstances can change over time. This makes it especially important to periodically reassess your organization’s investment strategies. Your organization can then assess progress, adjust as needed, and communicate results to stakeholders.
Regular performance monitoring should involve tracking financial metrics such as return on investment (ROI), portfolio diversification, and risk-adjusted returns. Monitoring processes may also include full audits on a regular schedule. Consider outlining an audit schedule within your Investment Policy. As a reminder, it is your Board’s responsibility to facilitate audits.
Ensure your Investment Policy includes procedures that outline the monitoring, measurement, and review processes that your organization deems necessary to ensure your investments are meeting their objectives. Your Board of Directors is responsible for overseeing these regular reviews.
Conclusion
If your organization is interested in drafting (or revisiting!) its Investment Policy, don’t hesitate to reach out today to the Gordon Fischer Law Firm.
For the month of March, I’m offering a special to Iowa nonprofits. I will draft, revise, and edit, specific to the unique mission of your nonprofit, the ten (10) policies expressly referenced by the IRS on Form 990.
Questions about the ten (10) policies referenced on IRS Form 990?
Again, my email is: gordon@gordonfischerlawfirm.com
Please reach out to me anytime!
####
March 7: Happy Birthday to Poet and Activist Amanda Gorman!
Nonprofits[Nonprofits Need Gift Acceptance Policies]
March 7, 2025
Born on this day in 1998, Amanda Gorman was just 22 years-old when she became the youngest
U.S. inaugural poet at the 2021 swearing-in of President Joe Biden. She has said that she drew inspiration for her poem, “The Hill We Climb,” from Abraham Lincoln, the Rev. Martin Luther King Jr., and poet Maya Angelou, who became the first woman to read a poem at a presidential inauguration in 1993.
Ahead of her reading, Oprah Winfrey gave Gorman a ring shaped like a birdcage in reference to Angelou’s, “I Know Why the Caged Bird Sings.” It was a thoughtful and generous gesture.
Nonprofits receive thoughtful and generous gifts, too.
Indeed, they rely on the generosity of the public to support their work. But did you know it’s sometimes wiser to “just say no” to a gift?
Not every gift comes from an “Angel Network”!
Knowing which donations to accept, and sometimes even better, which gifts to decline, is critically important for every nonprofit. That’s because some gifts, offered with the best intentions, can jeopardize a nonprofit’s reputation, create financial headaches, and even compromise its mission.
A well-drafted Gift Acceptance Policy (sometimes referred to as a “GAP”) can help a nonprofit avoid potential pitfalls, as well as establish procedures for accepting, tracking, and managing donations.
The IRS and GAPs
While the IRS doesn’t require a nonprofit to have a Gift Acceptance Policy, its Form 990 does ask that it be filed if available. (You’ll recall that IRS Form 990 is the “tax return” nonprofits must file every year). By expressly referencing the Gift Acceptance Policy on its Form 990, it’s clear the IRS considers adopting and following a GAP “best practice” for nonprofits — and a strong signal your nonprofit should adopt one if it hasn’t already.
Gone are the days when a nonprofit’s responsibilities were no more complicated than depositing checks or acknowledging a donor in a newsletter. Today, accepting and managing gifts is a more complicated undertaking that comes with heightened donor expectations, increased fiduciary obligations for Officers and Directors, and greater reporting requirements. Overall, a Gift Acceptance Policy provides necessary safeguards for both nonprofits and donors.
What IS a Gift Acceptance Policy, Anyway?
Broadly, a Gift Acceptance Policy describes the kinds of gifts a nonprofit will and will not accept and how they will be administered. Adopting a robust written policy regarding gift acceptance is an important part of nonprofit best practices that serve to instill fiduciary discipline, provide legal protection, and contribute to an organization’s long-term viability by ensuring that the nonprofit will not accept gifts that it does not have the time or resources to manage.
The process of developing and adopting a Gift Acceptance Policy also enables staff and boards to understand the complexities and challenges associated with certain kinds of gifts, focuses attention on donor stewardship, presents new opportunities for fundraising, and introduces clarity, control, and consistency into the nonprofit development program.
A case-by-case approach to accepting gifts—or having no policy whatsoever—can lead to poor decision-making by boards who might be tempted by a dazzling but wholly impracticable gift or blinded by their own tastes and personal opinions. Haphazard or arbitrary decisions can also confuse and frustrate potential donors, who are left wondering why their proffered gift was rejected.
Crafting and Adopting a Gift Acceptance Policy
A Gift Acceptance Policy is created through collaboration among a nonprofit’s Officers, Directors, staff, and legal counsel. Because each nonprofit is unique, it needs its own individual policy specific to its needs and mission and not one borrowed from another organization.
In addition to outlining its position on gifts, a Gift Acceptance Policy provides a roadmap for the Board of Directors and other fiduciary decision-makers. A clear and well-designed GAP also gives donors and prospective donors information they need for tax and other reporting purposes.
Approval by Board
Once drafted, the Gift Acceptance Policy must be approved and adopted by the nonprofit’s Board of Directors. Hopefully, a consensus of Directors can be reached on all issues addressed by the GAP.
Regular Reference and Review
The GAP should not be considered written in stone or simply left on a shelf to gather dust. The Gift Acceptance Policy should be readily consulted in any case of a non-cash or unusual gift.
More broadly, the GAP should be reviewed every year, at the least, to take into consideration any changes in the nonprofit’s circumstances, accommodate unexpected types of gifts, or reflect developments in tax law or technology.
Critical Elements of a Gift Acceptance Policy
A well-drafted Gift Acceptance Policy follows best practices in transparency, financial control, legal responsibility, and donor support. It should include the following elements:
Types of Gifts
Donors have a number of options when it comes to charitable giving. For nonprofits, though, not all gifts are created equal. Some gifts may be more costly or complex to manage than a nonprofit can handle, or the nature of a gift might fall outside its mission and goals.
A Gift Acceptance Policy needs to take into consideration all of the issues related to each of these types of gifts and provide clear and objective reasons the nonprofit can point to for accepting—or refusing—a gift.
Refusing Gifts
Refusing a gift is difficult for both a nonprofit and a donor. A Gift Acceptance Policy can help in this regard because it serves to manage the expectations of donors and guide the nonprofit’s decision-making. The reasons for turning down a gift are many and not always obvious.
There is still a mindset among many nonprofits that any donation is better than no donation. For new—or less sophisticated—nonprofits, turning down any gift can seem counterintuitive or even rude. That’s why a Gift Acceptance Policy that clearly sets out an organization’s position on gifts is in the best interest of every nonprofit, no matter its size or its mission. A strong GAP helps nonprofits “just say no” by delineating important strategic and financial reasons for accepting some gifts while rejecting others.
Donors Rights
If nothing else convinces a nonprofit that it must either adopt or revise its Gift Acceptance Policy, the specter of alienating existing donors or discouraging potential ones can often be the spur it needs. Building strong relationships with donors and enhancing donor retention are fundamental to any fundraising strategy and start with a formal Gift Acceptance Policy.
At minimum, a well-thought-out Gift Acceptance Policy assures donors they will receive timely and meaningful recognition. Further, the GAP can emphasis that donor intent will always be followed. After all, donors have a right to expect that their gift will be used as promised and consistent with their intentions.
Whether it is determining the criteria for naming rights for new building or deciding how to acknowledge a ten dollars ($10) check, a Gift Acceptance Policy helps to enhance and preserve donor relationships—especially when gifts are rejected. For example, if a nonprofit has a formal, written policy of rejecting, say, anonymous gifts, this makes it easier to explain to the donor why his or her anonymous donation cannot be accepted even though it might be generous—and tempting.
Conclusion
A Gift Acceptance Policy is critical for promoting charitable giving as well as limiting risk to nonprofits. They also help donors by providing clarity and enhancing transparency when deciding to make a gift. A GAP should be as integral to a nonprofit as professionally prepared employee and endowment policy handbooks, governing documents like articles and bylaws, and practices like board training.
Importantly, a Gift Acceptance Policy can make it easier for a nonprofit to say, “thanks, but no thanks” to a gift. And, who knows, it could mean the opportunity to say “yes” to an even better one.
Email Me!
If your organization is interested in adopting (or revisiting!) a Gift Acceptance Policy, please don’t hesitate to reach out to Gordon Fischer Law Firm.
For the month of March, I’m offering a special to Iowa nonprofits. I will draft, revise, and edit the ten (10) policies expressly referenced by the IRS on Form 990 (which of course includes a Gift Acceptance Policy) specific to the unique mission of your nonprofit.
My email is:
gordon@gordonfischerlawfirm.com
####
[Nonprofits Need Gift Acceptance Policies]
On March 6, 1945, Iowan George Nissen patents the trampoline
NonprofitsIowa Nonprofits Need to Jump Into Adopting and Implementing a Flexible-But-Firm Document Retention Policy
March 6, 2025
Iowa native George Nissen built his first “tumbling device” in 1934 out of angle iron, canvas, and rubber springs. He perfected the contraption, renamed it the “trampoline,” after the Spanish word for springboard. On March 6, 1945, Nissen received a patent for the springy piece of equipment.
Nissen’s trampoline was used to train aviators in World War II and astronauts during the Space Age. Athletes still use it for cross-training and trampolining has become a competitive sport in itself.
The backyard trampoline with a safety net is as ubiquitous as the swing set and — even better — can be repurposed for other uses after the kids get tired of it. People have turned them into everything from chicken coops to greenhouses to sunshades.
You could say a Document Retention Policy is like a trampoline — it will always give you something good to fall back on. (Ouch!)
Seriously, though, nonprofits need a good Document Retention Policy to ensure all information related to their business operations, employees, and finances is managed in a systematic and well-organized manner.
A well-drafted Document Retention Policy sets guidelines for how long particular records and documents — both electronic and paper — must be kept and how and when they should be destroyed. It serves two primary functions. First, making sure your nonprofit meets federal and state legal and regulatory requirements. Second, and just as important, it protects the reputation, privacy, and interests of you and your employees.
It should include a description of each kind of document the Policy covers and the retention time for each, because these can vary. For example, bank statements should be kept for at least three (3) years. On the other hand, the IRS requires that year-end financial statements be kept permanently, while the minimum retention period for general correspondence is two (2) years.
The Policy must also provide detailed information about how to label and store paper documents and electronic files. There should be guidelines for backing up electronic files, as well as a secure method for purging this information.
Following the guidelines of a Document Retention Policy might seem rather time-consuming and nit-picky, but in reality it will improve the efficiency of your record management while at the same increasing the security of the sensitive information in your files.
If you’re dedicated to elevating your nonprofit to new heights, creating, implementing, and observing a Document Retention Policy is essential. (Double ouch!)
If your organization is interested in adopting (or revisiting!) a Document Retention Policy, please don’t hesitate to reach out to Gordon Fischer Law Firm.
For the month of March, I’m offering a special to Iowa nonprofits. I will draft, revise, and edit the ten (10) policies expressly referenced by the IRS on Form 990 (which of course includes a Document Retention Policy) specific to the unique mission of your nonprofit.
My email is:
gordon@gordonfischerlawfirm.com
####
Iowa Nonprofits Need to Jump Into Adopting and Implementing a Flexible-But-Firm Document Retention Policy