by Dawn M.S. Miller, CFRE
Last Wednesday’s blog post included the basics of fundraising policies and procedures and the importance of the Gift Acceptance Policy. Let’s move onto a more controversial topic — refunding or declining donors’ gifts (cue the scary background music!).
A nonprofit has the option of refunding or declining gifts of cash, securities, real estate or other in-kind items if the organization believes that the contributions conflict with their mission and/or core values or would create a financial or administrative burden.
Recently, a group of fundraising professionals and I were swapping “donor beware” stories over breakfast. Some stories were funny, while others were no laughing matter. We all have, or will have, times in our career when decisions need to be made about refunding or declining gifts — or dealing with the consequences of an accepted gift. Below are three such tales …
- One of the most highly publicized donor gifts to be returned in recent memory occurred when UCLA rejected Donald Sterling’s $3 million gift to the university after he was banned from the NBA for life for racist statements. Was it a hard decision for UCLA to make? I’m sure it was, and there are plenty of folks with opinions on all sides of the issue that were ready to share their thoughts on whether UCLA should keep the money or return the funds. The University stated, “Sterling’s divisive and hurtful comments demonstrate that he does not share UCLA’s core values as a public university that fosters diversity, inclusion and respect.” That’s the bottom line.
- I know an organization that accepted a very large plot of land. What they originally thought was a wonderful opportunity to add real estate to their portfolio turned into a nightmare. What the donor did not disclose, and the nonprofit was unaware of since little due diligence and research was conducted, is that the land included a flooded mine that leached environmentally-damaging minerals onto the adjunct property. The cleanup took years and the costs skyrocketed. The nonprofit was responsible for paying those costs (shudder!).
- One more quick story: Entertainer Garth Brooks was in the headlines in 2012 when an Oklahoma hospital was ordered to pay him $1 million when it failed to build a women’s health center in honor of his late mother. This was a case of a verbal, not written agreement, between a donor and the hospital. Obviously both parties had a very different idea of the verbal agreement. The hospital was out of significant funds — dollars that could have been used to fulfill the hospital’s mission.
What do these stories illustrate? That we need to be clear with donors upfront about what our nonprofit can, or cannot, accept. Get everything in writing and take your time ensuring the gift is appropriate for your organization with few strings attached. All gifts need to be well understood, manageable and in line with your mission.
But don’t let the bad headlines overshadow the good that donors want to do for your organization. The great majority of benefactors have your mission and future in mind when they offer a gift.
Still think you don’t need policies and procedures for gifts to your organization? Think again! Look for Part Three of “Can We Accept That Gift from a Donor?” next week for more tips. Enjoy your week!
Dawn M.S. Miller, CFRE, is Director of Consulting for Fund Development Services at Zielinski Companies in St. Louis, Missouri. She can be reached at firstname.lastname@example.org or (800) 489-2150.
Founded in 1957, Zielinski Companies helps nonprofit and religious organizations address their financial, management and planning needs. The firm has a broad range of consulting service areas, including: Fund Development and Mission Advancement Consulting; Audit, Accounting and Tax Services; Property and Facility Planning; Organizational Management and Planning; Long-term Care, Facility and Staffing Consulting and Cash Management and Credit Card Services. For more information, please visit www.zielinskico.com.