Gift Acceptance Policy
In order to protect the interests of the M&M Area Community Foundation (MMACF) and the persons and other entities who support the MMACF, this policy is designed to assure that all gifts to, or for the use of, the MMACF, are structured to provide maximum benefit to all parties.
The goal is to encourage financial support for the MMACF without encumbering it with gifts which may prove to generate more cost than benefit, or which are restricted in a manner which is not in keeping with the mission of the MMACF.
It is understood that except where stated otherwise, this policy is intended as a guideline and that flexibility must be maintained since some gift situations can be complex, and decisions will only be made after careful consideration of a number of interrelated factors. Therefore, this policy will in some instances require that the Gift Acceptance Committee considers the merit of a particular gift and a final decision be made only by that Committee. The MMACF will comply with all federal, state, and local laws in conduct of asset development activities, including acceptance of gifts.
The MMACF accepts outright, planned and testamentary gifts. Planned and testamentary gifts include bequests, charitable gift annuities, charitable remainder trusts, charitable lead trusts, retained life estates, gifts of life insurance or retirement assets, interest in business entities such as partnerships, limited liability companies, or closely-held corporations, and such other gift arrangements as the MMACF Board of Directors may from time to time approve. All programs, solicitation plans, and activities shall be subject to the oversight of the MMACF Board of Directors.
The Gift Acceptance Committee, organized as an ad hoc committee of the MMACF Board of Directors will meet on an as-needed basis to review the details of unique or complex gifts. Members may include the MMACF Executive Director, MMACF Finance and Program Director, Chair of the Investment Committee and such other persons (Board members or not) as might offer professional expertise in the cost/benefit analysis of a potential gift. The Committee will assume the following responsibilities:
- Determine whether a specific gift contributes to the mission of the MMACF;
- Outline steps to be taken in the acceptance/rejection process;
- Advise MMACF staff how to protect the MMACF from any possible repercussions, and;
- When appropriate under the circumstances, recommend to the MMACF’s Board of Directors whether or not to accept the gift.
The MMACF is committed to the highest ethical standards of philanthropy and development. In all transactions between potential donors and the MMACF, the MMACF will aspire to provide accurate information and full disclosure of the benefits and liabilities that could influence a donor’s decision, including with respect to the MMACF’s fees, the irrevocability of a gift, prohibitions on donor restrictions, items that are subject to variability (such as market value, investment return, and income yield). In addition, the MMACF is responsible to provide periodic financial statements with regard to donor funds, and investment policies and other information needed by donors to make an informed choice about using the MMACF as a vehicle of charitable gifts. All donors should discuss their gifts with their own financial and tax advisors before signing any gift agreement. The role of the MMACF’s staff is to inform, guide, and assist the donor in fulfilling his or her philanthropic goals, without pressure or undue influence.
The MMACF Executive Director, and third parties (such as attorneys) retained by the MMACF for this purpose are authorized to negotiate planned gift arrangements with prospective donors, following program guidelines approved by the MMACF Board of Directors.
All planned giving arrangements requiring execution by the MMACF shall first be reviewed and approved as to form by the MMACF’s legal counsel. However, each agreement need not be reviewed by legal counsel provided it is based on a prototype Fund Agreement that has been reviewed and approved.
The MMACF may serve as trustee of irrevocable charitable remainder trusts and charitable lead trusts or as co-trustee with a trust institution, when it is irrevocably named as the sole beneficiary. However, the MMACF may serve, in select circumstances, when it is not the sole beneficiary if, in the judgement of the Gift Acceptance Committee, the interests of the MMACF will be best served. Expenses related to investments and administrative services shall be charged to the respective trusts.
The MMACF will not serve as a trustee or co-trustee of any revocable trusts or of other trusts that are not qualified charitable remainder trusts or charitable lead trusts.
The MMACF recognizes the paramount role of donors and their gifts to the MMACF in executing its charitable mission. In carrying out the MMACF’s asset development plan, staff will recognize and acknowledge donors in appropriate ways subject to the MMACF’s Confidentiality Policy. Donors reserve the freedom to determine the degree and type of recognition that they prefer and the MMACF respects the confidentiality of donors who do not wish to be publicly recognized.
In reviewing gifts to the MMACF, the Gift Acceptance Committee and/or staff will consider the following criteria:
- The charitable intent and ultimate community benefit
- The nature of restrictions, if any
- The permanency of the gift, or in the case of a non-permanent Fund, the amount of time the Fund will remain with the MMACF
- Projected costs of managing the gift asset
- Fee revenues to the MMACF for administering the gift
Acceptance by MMACF staff of gifts consistent with the purposes, bylaws and procedures of the MMACF shall not require review by the Gift Acceptance Committee if the gifts are in any of the following forms:
- Marketable securities
All other gifts, including those listed below, will require review and, if appropriate, approval by the MMACF’s Gift Acceptance Committee.
- Closely-held and S corporation stock
- Partnership interests
- Limited liability company interests
- Accounts receivable (e.g., gifts of loans, notes, mortgages)
- Real property
- Gifts of intellectual property, mineral reserves, precious metals
- Artwork, coin collections, jewelry, etc.
- Life insurance and annuity policies
Variance power gives the MMACF’s Board of Directors the ability to make changes to a Fund when its purpose is no longer necessary, can no longer be fulfilled, or has become inconsistent with the charitable needs of the community. This power to update Funds helps protect donors by avoiding the need for complex and costly legal proceedings.
Notwithstanding the Gift Acceptance Committee’s authority above, gifts requiring immediate action (such as gifts in late December) may be exempted from full Committee review if, in the MMACF’s Board President’s judgment, in consultation with the Chair of the Investment Committee, that gift may be accepted without in any way jeopardizing the MMACF’s exempt status.
Gifts requiring Gift Acceptance Committee review will be handled promptly. MMACF staff will immediately notify donors if a gift is not accepted.
Subject to the Gift Acceptance Committee’s review and approval authority, the MMACF’s Executive Director, will have the authority to handle inquiries, negotiate with donors, assemble documentation, retain expert and technical consultants, and execute agreements on the MMACF’s behalf.
The purpose of each gift to the MMACF must fall within the MMACF’s broad charitable purposes. The MMACF cannot accept any gift that will be directly or indirectly subject to any material restriction or condition by the donor that prevents the MMACF from freely and effectively employing the gift assets or the income from such assets to further its charitable purposes. In addition, the MMACF reserves the right to reject any gift that might place the other assets of the MMACF at risk or that is not readily convertible into assets that fall within the MMACF’s investment guidelines. The MMACF may also decline a gift if it is not able to administer the terms of the gift in accordance with the donor’s wishes.
The MMACF reserves the right to make any or all investment decisions regarding gifts to it in accordance with its Investment Policy, as amended from time to time. In making a gift to the MMACF, the donor gives up all rights, title and interest to the assets contributed. In particular, the donor relinquishes the right to choose investments and investment managers, brokers, or to veto investment choices for the contributed assets.
Generally, costs associated with the acceptance of a gift, such as the donor’s attorneys’ fees, accounting fees, and appraisal and escrow fees, are borne by the donor. The direct costs of administering gifts are generally paid out of the assets of the individual funds. Custodial, investment, and administrative fees are paid from the respective Funds in accordance with the MMACF’s guidelines and fee schedules. The MMACF reserves the right to assess a set-up fee.
Because the MMACF is legally responsible for all fundraising undertaken on its behalf, fundraising undertaken by donors in connection with Funds of the MMACF must be approved in advance by the MMACF pursuant to the MMACF’s Fundraising Policy. All such fundraising activities are also subject the MMACF’s supervision.
The Pension Protection Act of 2006 amended section 4943 of the Internal Revenue Code to limit ownership of closely-held business interests in a donor advised fund. A Fund’s holdings, together with the holdings of disqualified persons (donor, advisor, members of their families and businesses they control) may not exceed any of the following:
- 20% of the voting stock of an incorporated business;
- 20% of the profits interest of a partnership, joint venture, or the beneficial interest in a trust or similar entity;
- Any interest in a sole proprietorship.
These limitations do not apply if the donor advised fund holds an interest that does not exceed two percent of the voting stock and two percent of the value of the business.
Donor advised funds receiving gifts of interests in a business enterprise have five years from the receipt of the interest to divest holdings that are above the permitted amount. To prevent a violation of these rules, it is the MMACF’s policy to divest itself of such holdings within five years from the date the MMACF acquired the asset. If that is not possible, the asset will be transferred to a new or existing Fund that is not an advised fund.
Generally, gifted assets will be either 1) “liquid” assets such as cash or marketable securities, or 2) “illiquid” assets defined as everything that is not cash or marketable securities. With respect to non-cash assets, it is the MMACF’s general policy to liquidate all gifts promptly, per the MMACF’s Acceptance of Illiquid Assets Procedure On occasion, the Investment Committee may decide that it will not liquidate certain gifts immediately. Factors the Committee will consider include:
- Market conditions – a gift may be retained for a reasonable period of time if the likely sales price would be substantially less than the asset’s real value. Similarly, a large block of stock might be sold over a period of time in order not to artificially depress the price.
- Use by the MMACF – the MMACF may elect to keep gifts that it will employ directly in furtherance of its exempt purposes. For example, the MMACF might keep real property that it will use as its offices.
- Desirability as an investment – on rare occasions, the MMACF may be given property that it wishes to retain as an investment. Considerations in this decision include the projected return and how the asset fits into the MMACF’s investment portfolio.
If a Fund’s illiquid assets do not generate a sufficient return to permit grantmaking that is consistent with the assets’ value, the MMACF will seek an additional gift of cash or marketable securities to allow the Fund to begin making distributions.
Subject to MMACF Board of Director approval, the MMACF may accept the following types of gifts:
The MMACF accepts gifts of cash
- In currency of the United States;
- By checks made payable to the MMACF or the component Fund; or
- By credit cards or wire transfer to the MMACF’s account/s.
General. The MMACF accepts gifts of marketable, publicly-traded stocks and bonds. As a general rule, publicly-traded stocks and bonds contributed to the MMACF will be redeemed or sold as soon as practicable. All proceeds from such redemption or sale less commissions and expenses are then credited to the component Fund to which the stocks or bonds were originally contributed. The MMACF may accept gifts of publicly-traded stocks and bonds in any amount to any existing Fund. However, gifts to establish a new component Fund at the MMACF must meet the applicable minimum funding requirement.
Appraisal. No appraisal is required so long as the stock or bond is not subject to any restrictions, including those imposed by contract or the Securities Exchange Commission. Where appraisal is not required, the value of the gift is determined by calculating the mean of the high and low prices of the securities on the date of the gift.
General. This policy applies to all gifts of real property, including outright gifts of residential and commercial property and farmland; bargain-sale transactions; and gifts of remainder interests in which the donor retains a life estate. The MMACF does not accept gifts of time shares.
Gifts of real property must be reviewed by the Gift Acceptance Committee. Subject to the Committee’s approval, the MMACF may accept gifts of real property to any Fund. Gifts to establish a new component Fund at the MMACF must meet the applicable minimum funding requirement. In deciding whether to accept real property gifts the MMACF will:
- Determine whether the real estate gift is an acceptable minimum value.
- Confirm that the donor has legal capacity and is entitled to convey the property through copies of deed, title report, etc., provided by donor.
- Determine whether, if property is encumbered by debt, the debt is of a level that will not unduly burden the MMACF or adversely affect the marketability of the property.
- Perform a market and financial analysis prior to acceptance of the gift to determine whether the gift is a financially sound acquisition.
- Weigh its ability to manage commercial property for the time necessary to sell the property. For example, income producing property may subject the MMACF to unrelated business income tax and/or other types of expenses, including but not limited to, upkeep of land, maintenance of buildings and management of property.
- Evaluate whether any restrictions on the gift desired by donor will jeopardize the classification of such gift as charitable.
Appraisal. Each gift of real property giving rise to a charitable deduction of more than $5,000 must be appraised in accordance with federal tax law. The donor will be responsible for obtaining such appraisal.
Distributions. Distributions from a component Fund that consists entirely of real property are limited to the net income generated by the property less fees assessed by the MMACF and any unrelated business tax imposed thereon.
Liquidation. The MAMCF will generally seek to sell real property as soon as possible and generally will not accept gifts that cannot be liquidated within three years.
Procedures for Accepting Gifts of Real Property. Donors will provide the information and documents requested in the Real Property Donation Checklist and the Real Property Inquiry Form at the earliest possible time prior to the acceptance of the gift. Copies of those forms are appended to this policy. The MMACF may request additional information or documents when necessary to its evaluation of the proposed gift. Whenever possible, a member of the MMACF staff or an authorized representative will visit the property to determine its nature and type and to identify any potential problems not evident from information supplied by the donor that might hinder or prevent the MMACF’s sale of the property.
Environmental Assessment. If the property type warrants, donors will provide at least a Phase I Environmental Report with disclosure of any environmental problems or statement that none exists. Not every property will warrant an environmental assessment, however the MMACF reserves the right to require such assessment at Donor’s expense.
Closely-Held Stock and S Corporation Stock
General. Gifts of closely-held and S corporation stock must be reviewed by the Gift Acceptance Committee. Subject to the Committee’s approval, the MMACF may accept gifts of closely-held or S corporation stock in any amount to any existing Fund. Gifts to establish a new component Fund at the MMACF must meet the applicable minimum funding requirement. The MMACF may accept gifts of stock in closely-held or S corporation that generate unrelated business income only if certain agreements are reached with the donor and/or the corporation. These include an agreement by the donor that the taxes on the unrelated business income and the MMACF’s associated administrative expenses (e.g., accounting and tax return preparation) will be charged against the Fund holding the contributed stock. Further, the donor should agree to contribute additional cash to the Fund to pay the foregoing taxes and administrative expenses to the extent there is insufficient cash in the subject Fund balance to cover such taxes and expenses.
Appraisal. Each gift of closely-held or S corporation stock giving rise to a charitable deduction of more than $5,000 must be appraised in accordance with federal tax law. The donor will be responsible for obtaining such appraisal.
Distributions. Distributions from a component Fund that consists entirely of closely-held or S corporation stock are limited to the income generated by the securities less fees assessed by the MMACF and any unrelated business tax imposed thereon.
Liquidation. The MMACF will generally seek to redeem or sell closely-held or S corporation stock contributed as soon as possible and generally will not accept gifts that cannot be liquidated within three years.
Procedures for Accepting Gifts of Closely-Held or S Corporation Stock. The following procedures apply to all proposed gifts of S corporation stock:
- The MMACF will review corporate governing documents to determine the rights and obligations associated with the stock and whether or not the MMACF should undertake such obligations in light of such rights.
- The MMACF will review the corporation’s most recent tax returns and the donor’s most recent K-1 to determine the nature of the income associated with the stock (e.g., unrelated business income, active versus passive business).
- All proposed transfer documents must conform to the MMACF’s form or be approved by the MMACF’s legal counsel.
- As a condition for the MMACF’s acceptance of the gift, a written Fund Agreement between the donor and the MMACF should be in place that provides for the payment of administrative expenses and unrelated business income taxes generated by the stock to the extent there is insufficient cash in the Fund to which the stock has been donated to cover such expenses and taxes. The Fund Agreement should also require the donor to indemnify the MMACF against all liabilities incurred by the donor on account of the stock up to the date of the gift.
- The donor shall provide the MMACF with all documents which outline, discuss or relate to the duties and liabilities which shareholders have, including Shareholder Agreements.
General Partnership Interests
The MMACF generally does not accept gifts of general partnership interests due to the unlimited liability of general partners.
Limited Partnership Interests
General. Gifts of limited partnership interests must be reviewed by the Gift Acceptance Committee. Subject to the Committee’s approval, the MMACF may accept gifts of limited partnership interests in any amount to any existing Fund. Gifts to establish a new component Fund at the MMACF must meet the applicable minimum funding requirement. The MMACF reserves the right to carefully screen all proposed gifts of limited partnership interests to ensure that they place no undue risk upon the MMACF.
The MMACF generally does not accept gifts of interests in partnerships that carry on active business. Interests in passive, investment-type limited partnerships such as those holding real estate, stocks and bonds, are preferred.
The MMACF may accept gifts of limited partnership interests that generate unrelated business income only if certain agreements are reached with the donor. These include an agreement by the donor that the taxes on the unrelated business income and the MMACF’s associated administrative expenses (e.g., accounting and tax return preparation) will be charged against the Fund holding the partnership interest. Further, the donor would have to agree to contribute additional cash to the Fund to pay the foregoing taxes and administrative expenses to the extent there is insufficient cash in the subject Fund balance to cover such taxes and expenses.
Appraisal. Each gift of limited partnership interest must be appraised in accordance with federal tax law. The donor will be responsible for obtaining such appraisal.
Distributions. Distributions from a component Fund that consists entirely of limited partnership interests are limited to the income distributed to the MMACF by the partnership less fees assessed by the MMACF and any unrelated business income taxes imposed thereon.
Liquidation. The MMACF will generally seek to redeem or sell limited partnership interests contributed to it within three years.
Procedures for Accepting Limited Partnership Interests. The following procedures apply to all proposed gifts of limited partnership interests:
- The MMACF will review the partnership governing documents to determine the rights and obligations associated with the limited partnership interest and whether or not the MMACF should undertake such obligations in light of such rights. If required, the donor should be asked to obtain the other partners’ consent to the gift as a condition to the MMACF’s accepting the gift.
- The MMACF will review the donor’s most recent K-1 and the partnership’s tax returns to determine the nature of the income associated with the limited partnership interest (e.g., unrelated business income, active versus passive business).
- All proposed transfer documents must conform to the MMACF’s form or be approved by the MMACF’s legal counsel.
- As a condition for the MMACF’s acceptance of the gift, a written Fund Agreement between the donor and the MMACF should be in place that provides for the payment of administrative expenses and unrelated business taxes generated by the interest to the extent there is insufficient cash in the Fund to which the interest has been donated to cover such expenses and taxes. The Fund Agreement should also require the donor to indemnify the MMACF against all liabilities incurred by the donor on account of the limited partnership interest up to the date of the gift.
Limited Liability Company Interests
The same considerations given to gifts of limited partnership interests apply to gifts of interests in limited liability companies.
Tangible Personal Property
General. The MMACF accepts gifts of personal tangible property (e.g., artwork, coin collections, jewelry) only if: (i) the MMACF determines that the property will be used in furtherance of the MMACF’s exempt purposes or (ii) the MMACF will be able to sell the property. If the property is to be sold, the MMACF will accept the gift only if it has sufficient value to justify the expenditure or resources required for such sale. The MMACF may accept gifts of personal tangible property in any amount to any existing Fund. Gifts of tangible personal property to establish a new component Fund at the MMACF must meet the applicable minimum funding requirement.
Appraisal. Each gift of personal tangible property for which the donor expects a charitable deduction exceeding $5,000 must be appraised in accordance with federal tax law. The donor will be responsible for obtaining and paying for such appraisal.
Procedures for Accepting Personal Tangible Property. The following procedures apply to all proposed gifts of personal tangible property:
- The MMACF will review all prior appraisals and authentication documents, if any, relating to the property.
- If the property is to be sold, the MMACF will ascertain the market for such property and estimate the costs to be incurred in connection with the sale as well as the costs of holding the property prior to sale.
- All costs incurred by the MMACF in connection with the holding and sale of the property shall be charged against the sale proceeds, with the balance being credited to the Fund to which the property has been contributed.
General. The MMACF may accept gifts of life insurance policies so long as: (a) the policy is not encumbered (i.e., there is no outstanding loan against the policy); and (b) the MMACF is made the policy’s owner and primary beneficiary. When premium payments can no longer be made because there is insufficient value in the policy to keep it in force, or because the MMACF chooses to discontinue premium payments, the policy will be surrendered. The MMACF may accept gifts of life insurance policy in any amount to any existing Fund. Gifts of life insurance policy to establish a new component Fund at the MMACF must meet the applicable minimum funding requirement.
Appraisal. Each gift of life insurance policy giving rise to a charitable deduction of more than $5,000 must be appraised in accordance with federal tax law.
In connection with the acceptance of many types of illiquid assets, the MMACF may incur costs such as unrelated business income tax, fees or commissions associated with the sale or liquidation of assets, asset management and holding costs, consultant fees or other expenses outside the normal scope of the MMACF’s administrative costs. Accordingly, as a condition of the MMACF’s acceptance of the gift, the MMACF may require a pledge or other written agreement between the donor and the MMACF that provides for the payment of all or a portion of any such costs or expenses, including unrelated business income taxes, to the extent there is insufficient cash in the Fund to which the asset(s) have been donated to cover such costs.
Deferred gifts and planned giving are gifts whose benefit does not fully accrue to the MMACF until some future time, or whose benefits are split with non-charitable beneficiaries. MMACF staff are authorized to solicit direct charitable gifts through wills, as well as contributions to establish gift annuities or charitable trusts. The MMACF will work closely with donors and confer with financial advisors, at the request of the donors, to realize these gifts. In cases where the gifts are complex, the President/ED may request review by the Gift Acceptance Committee.
The MMACF accepts bequests from donors who have directed in their wills that certain assets be transferred to the MMACF and honors the wishes of the donor as expressed, but reserves the right of refusal as necessary and appropriate. Sample bequest language for restricted and unrestricted gifts is available from the MMACF, to donors and/or advisors, upon request. The MMACF may not be named as Executor for a donor in his/her will and will not serve if named. The MMACF may create a named Fund in memory of the donor, if there is no stipulation for anonymity.
Retirement Plans or IRA Accounts
Donors may make lifetime gifts of retirement assets or name the MMACF as the beneficiary of their plan. Retirement plans include, but are not limited to, Individual Retirement Accounts (IRA), 401(k), 403(b), and defined contribution plans.
Life Income Gifts
The MMACF will work closely with donors to implement planned giving options that provide income to a donor or his/her designees, as well as financial benefit to the MMACF (split-interest gifts). Options include:
Charitable Remainder Trust (CRT)
This trust makes payments to one or more beneficiaries for their lifetimes, or for a fixed term, or a combination of both. Assets are put into a trust, beneficiaries are paid, and when the trust term ends, the remainder in the trust passes to the MMACF for its charitable purposes. The donor names a Trustee to manage the trust and determines whether the payout will be fixed (a charitable remainder annuity trust (CRAT)) or variable (a charitable remainder unitrust (CRUT)). Trusts can be set up during the donor’s lifetime or by will. The MMACF encourages donors to consult their own legal counsel and tax advisors to create a charitable remainder trust. At the donor’s request, the MMACF will confer with his/her advisors to assist in establishing the trust from which it will ultimately benefit. The MMACF will not serve as Trustee of the trust.
Charitable Lead Trust (CLT)
This trust first makes distributions to the MMACF for a specified period, with the remainder reverting to the donor or another beneficiary at the end of the period. It may be set up during one’s lifetime or in a will. The MMACF will work closely with the donor and/or his advisor to create the trust, but will not serve as Trustee.
Charitable Gift Annuity (CGA)
This planned gift is based on a gift of cash or securities in exchange for lifetime income, either immediate or deferred, to the donor. It is a contract between the donor and the MMACF and is backed by our total assets. The gift is in part a charitable gift and in part the purchase of an annuity.
A donor may wish to contribute a personal residence or farm to the MMACF and retain the right to use the property until death. Upon the donor’s death, the MMACF owns the entire interest in the property.
Real Property Donation Checklist
- 1. Exact legal name of donor and federal identification number.
- 2. Description of property (copy of deed).
- 3. Description of any buildings or other structures located on the land.
- 4. Boundary survey of property with location of all structures, easements, and encumbrances appearing on the face of the survey.
- 5. Information regarding existing zoning status.
- 6. Information on all ingress/egress for the property.
- 7. Description of prior use of the property.
- 8. Description of use of surrounding property, with specific disclosure of any storage tanks or potential environmental factors affecting the property.
- 9. Disclosure of any contemplated or anticipated condemnations, right-of-ways or other actions by municipalities that may affect the subject property.
- 10. Phase I environmental report on the property, including environmental report on any structures located on the real estate.
- 11. Evidence of title, such as title examination and report, title insurance commitment, or schedule describing any liens, encumbrances, or title matters affecting the property.
- 12. Copy of appraisal showing the fair market value of the property current within sixty days.
- 13. Disclosure of amount of existing real estate taxes, insurance premiums, and assessments attributable to the property.
- 14. Discussion with proposed donor regarding any special arrangements for Fund or other sources to address ongoing expenses for taxes, insurance, assessments, maintenance, grass cutting, security, utilities, and similar items.
Approved by the Board of Directors – October 13, 2021
Approved by Joint Compliance, Agreement and Review Committee / Investment Committee – September 17, 2021
Dowload the Gift Acceptance Policy. This Do ument also includes a Property Inquiry Form.