Gift Policies Simplified: What Every Development Officer Needs to Know
When you are working with clients and steering a capital campaign, gift acceptance and counting policies might not sound like the most exciting topic on the agenda. But getting these rules sorted out upfront is one of the smartest moves an organization can make.
Most donors—and even a lot of client boards—simply don’t know IRS regulations or standard campaign counting rules. If you don't have a clear, board-approved manual in place before the campaign kicks off, you risk running into awkward conversations halfway through.
Here is a practical, simplified walkthrough of the core gift policies you need to know when advising clients.
Real Estate and Non-Cash Gifts: Look Before You Leap
Non-cash gifts can be transformative, but they also carry significant risk if you don't do your homework.
The $5,000 Rule and Independent Appraisals: Anytime a donor offers a non-cash gift valued over $5,000, IRS Form 8283 comes into play. The appraisal must be done by an independent, certified appraiser who is not related to the donor. Always advise your client that the donor should pay for this appraisal—the IRS looks closely at this, so keep it strictly independent.
Get Board Approval in Writing: Non-cash assets—especially land, buildings, or large equipment—must be officially approved by the governing board or foundation president before acceptance.
Inspect the Property: Don't accept a piece of real estate blind. Connect with a local real estate agent (ideally a trusted alum or supporter) to evaluate whether the property can actually be liquidated. It pays to inspect the parcel firsthand—no organization wants to find out after closing that their new asset is sitting under three feet of water!
The Three-Year Disposition Rule: If an organization accepts property appraised at $100,000 and ends up selling it within three years for $50,000, they must notify the IRS of the sale price using Form 8282. That can adjust the donor's original deduction, so managing expectations early is key.
Receipts and Donor Deductions: Keep It Simple
There is often confusion around what paperwork a donor actually needs for their taxes.
A Thank-You Letter Is Enough: A canceled check alone is not sufficient evidence for gifts over $250. However, organizations often overcomplicate things by sending multiple end-of-year or quarterly statements. All that is required is a timely, written gift acknowledgment thanking the donor, stating the exact dollar amount, and confirming that no goods or services were provided in exchange.
Quid Pro Quo (Donor Benefits): If a donor gets something tangible in return for their gift, their tax deduction drops by the value of that benefit. A classic example is premium athletic seating at universities. If a contribution grants the exclusive right to purchase a stadium suite or club box, the value of that right is carved out (typically around 20%), leaving only the remaining 80% portion deductible.
Pledges, Closing Calls, and Donor Control
Managing pledges accurately keeps your campaign totals honest and realizable.
The Eight-Year Pledge Guideline: Standard pledge payment periods should generally not exceed eight years. If a donor commits $1 million over ten years, count the first eight years ($800,000) in your active campaign numbers. Once the campaign progresses a couple of years down the road, you can fold in the final two years.
Closing Pledges Over the Phone: When following up on solicitations, don't wait for a pledge form to arrive in the mail. If a donor agrees to a gift over the phone, ask permission to fill out the pledge form on their behalf right then. Follow up immediately with a warm letter confirming the details: "Thank you for your pledge of $10,000 made over the phone on [Date]." Experience shows the default rate on confirmed phone pledges is no higher than standard signed cards.
No Pledging Corporate Matches: A pledge can only be made by the person or entity with direct legal control over the funds. An employee can pledge their own $5,000 gift, but they cannot legally pledge the $5,000 matching gift from their employer. Count matches when the check actually arrives.
Donor Control Boundaries: Donors can designate what project or fund their gift supports, but they cannot control who receives the funds. For instance, a donor cannot pick their own scholarship recipient, demand a specific faculty member receive an endowed professorship, or ask for special admission treatment for a family member. Restricting scholarships by geographic area is fine, but designating awards based on protected demographics (like race) is no longer permissible.
What Counts (and What Doesn't) in Campaign Totals
Keeping campaign numbers clean means knowing where to draw the line.
Contracts and Grants: Routine fee-for-service contracts and federal grants shouldn't be mingled with charitable fundraising totals. If an institution insists on showing contract totals at the end of a campaign, they must clearly footnote it as a separate, excluded line item.
Volunteer Services: While volunteer support is invaluable, the IRS does not allow a charitable deduction for donated time or labor, so it cannot be credited toward campaign totals.
Corporate Sponsorships vs. Advertising: A corporate gift is fully countable if the sponsor gets simple name, banner, or logo placement. The moment you start displaying competitive pricing or active product promotions, the IRS views it as commercial advertising and is non-countable.
Bargain Sales & In-Kind Gifts: If a donor sells property or equipment to the organization at a steep discount (e.g., selling a $200,000 building for $100,000), the discounted difference ($100,000) counts as a gift-in-kind. When recording general in-kind items, always count what the organization would have realistically paid on the market, rather than an inflated retail tag.
Planned Giving, Life Insurance, and Life Estates
Planned gifts provide significant long-term growth, provided the policies around them are realistic.
Permanent Life Insurance: Only accept permanent cash-value policies (no term life), and make sure the foundation or institution is named both owner and irrevocable beneficiary. Push for policies that are fully paid up in five years (seven at most). If premiums drag on longer, donors often stop paying, leaving the charity to either surrender the policy or pay the premiums out of pocket.
Recognition vs. Face Value: While campaign counting rules might credit the cash surrender value or face value of a policy depending on board policy, donor recognition benefits should always be tied strictly to the actual cash premiums paid during the campaign.
Age-Based Bequest Counting: A good rule of thumb is to be cautious about counting bequests from younger donors at face value. A sensible, standard scale counts 50% of an estate gift for donors aged 60–65, 75% for ages 65–69, and 100% for donors 70 and older.
Retained Life Estates: If a donor owns a farm or residence they intend to leave in their will, suggest a life estate. They deed the property to the organization now, retain the full right to live on and use the property for life, and secure an immediate income tax deduction for the remainder interest.
Spousal Credit: When an alumni couple makes a gift via a single check, assign the legal credit to the partner who signed the check and record an equal soft credit for the spouse so both are recognized.
The Bottom Line: Establish Policies on Day One
The overarching lesson is simple: don't wait for a unique gift scenario to pop up in the heat of a campaign.
Work with your client’s leadership and board of trustees to review, tailor, and formally approve a comprehensive Gift Policies and Procedures Manual at the very beginning of the engagement. Having these ground rules locked down saves time, protects the institution, and gives project managers the confidence to guide donors smoothly across the finish line.
If you would like a copy of our policies and procedures manual, please email mariatraylor@jfsg.com.
