December 29, 2016
For many organizations, winning a grant might seem like one of those obviously good things. The choice of whether or not to accept the funding might seem indulgent or even absurd. But you should know that you do have a choice, and that the choice of whether or not to accept funding can be a difficult one.
Grants are binding contracts, and you must be able to deliver on your promises. Moreover, your funder list is frequently public and if any donors conflict with your values as an organization – or even the very aims you are working so hard to advance – you can tarnish your image or credibility with other donors or stakeholders.
Below, we are going to dive into what a giving policy is, why you should have one, and how to create one. But before we do, we are going to share four true scenarios of when organizations we know found themselves questioning whether or not to accept funding.
an unacceptable commitment or restriction
Some grants come with strings attached, and while most funders stick to a pretty basic restriction on advocacy or spending funds as allocated in your request, they are allowed to have others. For example, there are a few funders that require abortion disclosure forms and require grantees not to discuss abortion with pregnant women or refer women to clinics that perform abortions. Elevate knows of an organization that did not know of this required commitment, was awarded a grant, and had to make the difficult decision to turn down the funding because they were committed to providing all options to young women facing this decision.
A potential conflict with values and a negative public image
A few classic scenarios here are youth organizations that do not accept funding from tobacco or alcohol-related corporations, or environmental organizations who do not accept funding from oil-related corporations. In both such instances, organizations must determine first whether or not accepting funding contradicts their mission to advance the welfare of children or environmental initiatives. Second, they must determine if accepting such funding would harm their brand, or their supporters image of them.
From our own experience comes a more nuanced example: While many nonprofits benefit from the Wal-Mart Foundation’s generosity, they were a strong opponent of raising the minimum wage here in Washington, DC. Many nonprofits working to advance the well-being of low-income residents chose not to accept funding from them as a result of their stance on the issue.
A conflict of interest or the perception of one
A client of ours won a grant from an energy supplier, while at the same time running programs that helped low-income communities and nonprofits contract with energy suppliers. While the process for selecting a supplier itself was fair and merit-based, it just so happened that the corporation that donated through their foundation was also the one selected. When considering potential conflicts of interest, perception matters. For example, a large donation to your capital campaign from a construction company that bid on your new building will raise questions. If your organization is ever in the position of awarding contracts, be careful when you are also soliciting donors and funders.
A really expensive gift
Certain types of gifts – like personal property and real estate – can be very expensive and considered in your policy before you accept them. A quick scan of Google can reveal some horror stories, like a donation of two paint factories to a nonprofit. The factories became Environmental Protection Agency Superfund sites and cost the organization roughly $2 million.
Closer to home, Elevate has a client that received over $1M in personal property – everything from luxury cars to silverware. While it is an impressive gift for a small organization, it was an incredibly expensive endeavor to catalogue, value, store, and sell all of this property. Moreover, explaining the difference in the initial value and the sale price – and the thousands of dollars in ‘paper losses’ consistently complicated communicating the real financial position of our client to funders.
What is a gift acceptance policy?
A gift acceptance policy will help you decide whether to accept charitable or in-kind gifts. Policies also provide guidance to donors, so that they give in a way that is useful to you.
According to the Nonprofit Standards for Excellence, an organization should have the following policies in place:
- Procedures to determine any limits on individuals or entities from which the organization will accept a gift;
- The purposes for which donations will be accepted;
- The type of property which will be accepted; and
- Whether to accept an unusual or unanticipated gift in light of the organization’s mission and organizational capacity.
Your policy should include how you make decisions about non-standard gifts. For example, you might choose to refer the decision to a fast-acting Board committee. You should also identify key advisors, such as a real estate appraiser and legal advisor, in advance. Your Board should approve and adopt the policy officially, with an effective date, and a plan to revisit it regularly.
Why should you have a GIVING policy?
You do not want to create a policy about your values or public brand when there is already real money being offered to your organization. Such a scenario could cloud even the best judgement, as long-term trade-offs about values and reputation should not be made on short-term horizons or when financial pressures are palpable. Having a policy in place, which your Board has careful considered over time and in advance helps create discipline and empowers your staff to turn money down.
How should you create a giving policy?
Policies are best developed collaboratively with all the relevant stakeholders in the room; this might include your executive director, director of development, grant writer, planned giving staff, Board of Director’s fundraising or policy committee, and professional development advisors.
Samples!
Below are two samples we share with clients:
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