Gift Acceptance Policies and Guidelines
The National Community Foundation (“Foundation”) is a Delaware charitable trust described under Section 501(c)(3) of the Internal Revenue Code and tax-exempt as a publicly supported organization under Section 509(a)(1) and 170(b)(1)(A)(vi) of the Code. In order to encourage legitimate and viable gifts to charity, the Foundation has adopted the following policies and guidelines governing the acceptance of gifts.
The Foundation supports the national philanthropic community of charitable organizations, foundations, individuals, and their professional advisors. The Foundation’s ultimate goal is to provide charitably inclined individuals and organizations with full access to the entire spectrum of planned giving programs and charitable giving vehicles.
A. Purpose of Policies and Guidelines
The purpose of these policies and guidelines is to create a structure to govern the acceptance of gifts by the Foundation and to provide guidance to prospective donors and their advisors when making gifts to the Foundation. The provisions of these policies will apply to all gifts received by the Foundation for any of its programs or services. The Foundation may also request a donor to make certain representations and warranties regarding his or her gift, similar in structure and design to the attached Gift Agreement.
B. Use of Legal Counsel by the Foundation and a Donor
1. Prior to accepting a gift, the Foundation will seek the advice of legal counsel in appropriate circumstances. For example, the Foundation will request review by counsel where:
a. A donor desires to make a gift of closely held stock, especially if the stock is subject to restrictions or buy-sell agreements;
b. The Foundation is to be Trustee;
c. A gift requires the Foundation to assume an obligation, such as with a bargain sale;
d. There is a potential conflict of interest that may invoke IRS involvement or sanctions; and
e. Any other instance discussed herein, or where the Board of Trustees feels it appropriate.
2. Prior to accepting a gift, the Foundation will generally require that the donor seek the advice of legal counsel in order to protect the donor. The Foundation will also strongly urge the donor to seek the assistance of other personal, legal, and financial advisors concerning tax and estate planning consequences. The Foundation will comply with the Model Standards of Practice for the Charitable Gift Planner promulgated by the Partnership for Philanthropic Planning (the old National Committee on Planned Giving), a copy of which is attached hereto.
C. Restrictions on Gifts by Donors
1. The Foundation will accept unrestricted gifts, and gifts for specific programs and purposes, provided that such gifts are consistent with its stated mission, purposes, and priorities. The Foundation will not accept gifts that:
a. Are too restrictive in purpose;
b. Violate the terms of the organizational documents of the Foundation;
c. Place direct or indirect control of the Foundation in a donor, substantial contributor or any other disqualified person;
d. Provide a direct or indirect private benefit/inurement to the donor, a substantial contributor or any disqualified person;
e. Allow the donor to retain control over the contribution; or
f. Are too small given the amount of time and effort required to accept and/or administer the gift.
2. All decisions on the acceptance or refusal of a gift will be the responsibility of the Board of Trustees of the Foundation.
D. Duties of the Board of Trustees
Among other things, the Board of Trustees are charged with the responsibility of reviewing all gifts made to the Foundation, properly screening and accepting those gifts, and establishing gift acceptance policies.
E. Types of Gifts
1. All gifts to the Foundation must be acceptable to the Board of Trustees. In general, the following gifts are acceptable:
b. Tangible Personal Property
c. Business Interests
d. Real Estate
e. Remainder Interests in Property
f. Oil, Gas, and Mineral Interests
g. Bargain Sales
h. Life Insurance
i. Charitable Remainder Trusts
j.Charitable Lead Trusts
k. Retirement Plan Beneficiary Designations
2. The following criteria govern the acceptance of each gift form:
a. Cash: Cash is acceptable in any form. Checks will be made payable to the Foundation and will be delivered to the Foundation’s administrative offices.
b. Tangible Personal Property: All gifts of tangible personal property will be examined in light of the following criteria:
i. Does the property fulfill the mission of the Foundation?
ii. Is the property marketable?
iii. Are there any undue restrictions on the use, display, or sale of the property?
iv.Are there any carrying costs for the property?
c. Business Interests:The Foundation can accept both publicly traded securities and interests in closely held businesses.
i. Publicly Traded Securities: Marketable securities may be transferred to the Foundation account maintained at one or more brokerage firms or delivered physically with the transferor’s signature or stock power attached. In some cases marketable securities may be restricted by applicable securities laws, and these gifts will require additional due diligence by the Foundation prior to acceptance.
ii. Closely Held Business Interests: A donor may make a gift to the Foundation of closely held business interests, which include not only debt and equity positions in non-publicly traded companies but also interests in LLPs, LLCs, or other ownership forms. These gifts must be reviewed legal counsel and potential other advisers prior to acceptance to determine that:
(a) there are no restrictions on the business interest that would prevent the Foundation from converting the interest to cash;
(b) the business interest is marketable; and
(c) the business interest will not generate any unacceptable business or tax consequences for the Foundation.
d. Real Estate:
i. Gifts of real estate may include developed property, undeveloped property, or gifts subject to a prior life interest.
ii. Prior to acceptance of real estate, the Foundation will likely require a Phase I Environmental Study of the property to insure that the property does not have environmental damage.
iii. In the event that the initial inspection reveals a potential problem, the Foundation will retain a qualified inspection firm to perform further tests, such as a Phase II Environmental Study, prior to acceptance of any gift.
iv. In most cases, a title insurance binder and a survey will be obtained by the Foundation prior to the acceptance of the real property gift. The cost of this title binder and survey will generally be an expense of the Foundation.
v. Prior to acceptance of the real property, the gift will be approved the Foundation’s legal counsel. Criteria for acceptance of the property will include:
(a) Is the property useful for the purposes of the Foundation?
(b) Is the property marketable?
(c) Are there any unacceptable restrictions, reservations, easements, or other limitations associated with the property?
(d) Are there carrying costs, which may include insurance, property taxes, mortgages, or notes, etc., associated with the property?
(e) Does the environmental audit reflect that the property is acceptable?
e. Remainder Interests in Property: The Foundation will accept a remainder interest in a personal residence, farm, or vacation property subject to the provisions above relating to gifts of real estate. The donor or other occupants may continue to occupy the real property for the duration of the stated life. At the death of the donor, the Foundation will most likely reduce the gift to cash. Where the Foundation receives a gift of a remainder interest, expenses for maintenance, real estate taxes, and any property indebtedness are to be paid by the donor or primary income beneficiary, and this relationship must be confirmed in writing through a Co-Ownership Agreement acceptable to legal counsel for the Foundation.
f. Oil, Gas, and Mineral Interests: The Foundation may accept oil and gas property interests, where appropriate. Prior to acceptance of an oil and gas interest, the gift must be approved by the Foundation’s legal counsel. Criteria for acceptance of the property will include:
i. Gifts of surface rights should have a value of at least $20,000;
ii. Gifts of oil, gas and mineral interests should generate at least $3,000 per year in royalties or other income (as determined by the average of the three years prior to the gift);
iii. The property should not have extended liabilities or other considerations that make receipt of the gift inappropriate;
iv. If the interest is a working interest, the Foundation must develop a plan to minimize that impact if accepted;
v. The property should undergo an environmental review to ensure that the Foundation has no current or potential exposure to environmental liability.
g. Bargain Sales: The Foundation may enter into a bargain sale arrangement in appropriate instances. The Foundation will need to:
i. Obtain an independent appraisal substantiating the value of the property at a minimum fair market value;
ii. Determine that the debt ratio is less than 50% of the fair market value;
iii. Determine that it will use the property, or that there is a market for sale of the property within 12 months of receipt; and
iv. Determine the anticipated carrying costs of the property during the holding period, including expenses and costs to be incurred to safeguard, insure, and expense the property (including property tax, if applicable).
h. Life Insurance: The Foundation must be named as both beneficiary and irrevocable owner of an insurance policy before a life insurance policy can be recorded as a gift. The gift will be valued at the lesser of its interpolated terminal reserve value, or cash surrender value. If the donor does not elect to continue to make gifts to cover premium payments on the life insurance policy, the Foundation may:
i. continue to pay the premiums;
ii. convert the policy to paid up insurance; or
iii. surrender the policy for its current cash value.
i. Charitable Remainder Trusts: The Foundation will generally accept designation as remainder beneficiary of a charitable remainder trust. The Foundation will normally accept appointment as Trustee of a charitable remainder trust.
j. Charitable Lead Trusts: The Foundation will generally accept a designation as income beneficiary of a charitable lead trust. The Foundation will normally accept an appointment as Trustee of a charitable lead trust.
k. Retirement Plan Beneficiary Designations: The Foundation will work with a donor’s counsel and/or other advisors o structure retirement plan benefit payouts as requested.
F. Miscellaneous Provisions
- Securing appraisals and legal fees for gifts to the Foundation: It will be the responsibility of the donor to secure legal counsel and an appraisal for the donor’s own purposes. The donor will be responsible for the fees associated with each.
- Valuation of gifts: The Foundation will record a gift received by the Foundation at its fair market value on the date of the gift.
- Responsibility for IRS Filings upon sale of gift items: The Foundation is responsible for filing IRS Form 8282 upon the sale or disposition of any asset sold within three years of receipt by the Foundation where the charitable deduction value of the item was $5,000 or greater. The Foundation must file this form within 125 days of the date of sale or disposition of the asset.
- Acknowledgment: All gifts made to the Foundation will be acknowledged in compliance with the current IRS requirements.
- Changes to Policies: These policies and guidelines have been reviewed and accepted by the Board of Trustees of the Foundation, and will change from time to time. The Board of Trustees of the Foundation must approve any changes to or deviations from these policies.
Approved on the 5th day of May, 2014.
Bruce Bigelow, President & CEO
National Community Foundation