Churches accept charitable gifts from their members, corporate donors, and the public. However, all gifts are not the same. For this reason, church leadership should discuss what practices may be put in place to manage different kinds of gifts.
Churches should solicit and accept gifts that are consistent with their core ministries. Cash donations and other forms of support are generally welcomed from individuals, partnerships, corporations, foundations, government agencies, or other entities interested in furthering the church’s cause.
A Gift Acceptance Policy can help a church manage the expectations of donors and serve as guidance on how to handle donations.
Accepting some types of gifts may run counter to the church’s charter. This may occur if the donor demands certain statements from the church. Consequently, church officials should weigh whether they should accept gifts with strings attached.
Some gifts may lead to legal obligations that the church is not otherwise prepared to handle. For instance, a gift of real property may raise property tax issues; gifts of motor vehicles or boats may prompt concerns about disposal of hazardous waste or licensing rules. The church may not be equipped to either use or dispose of certain types of gifts (i.e., obsolete computers).
Marketable securities, such as stocks and bonds, may be gifted to the church. This process may be made electronically by way of an account maintained at one or more brokerage firms. The gift transfer may also be physical with the transferor’s endorsement or signed stock power attached. Marketable securities may be sold promptly upon receipt or held if consistent with the church’s investment policies.
Churches may receive inheritances through revocable trusts, commercial annuities, and retirement plans. Donors are often encouraged to make bequests to the church under their wills. The church should work with the donor to make the appropriate arrangements.
The church can accept gifts of life insurance where the church is named as both beneficiary and/or irrevocable owner of the insurance policy. The church may request the donor agree to pay, before due, any future premium payments owing on the policy.
The church should review and determine whether to accept any gifts of tangible personal property considering several factors. Is the property marketable? Are there any unacceptable restrictions imposed on the property? Are there any carrying costs for the property for which the church may be responsible? Is the title to the property clear?
All gifts of real estate should be subject to careful review by the church. Prior to accepting a gift of real estate other than a personal residence, the church may require an initial environmental review by a qualified environmental firm. If the initial review reveals a potential problem, and the church accepts the gift, it could be responsible for any hazardous waste disposal.
Other questions with real estate gifts include whether there are covenants, conditions, reservations, easements, encumbrances, or other limitations associated with the property. Additionally, there may be carrying costs (including insurance, property taxes, mortgages, notes, or the like) or maintenance and repair expenses associated with the property?
The church should seek the advice of legal counsel in matters relating to acceptance of some gifts. A legal review is recommended for: 1) gifts that are subject to restrictions, 2) requires the church act in any fiduciary capacity, and 3) gifts committing the church to financial or other obligations.