For nonprofit organizations, a potential gift can be a great opportunity—or a big liability. The key is to be able to distinguish the two, and a gift acceptance policy can help. For organizations that don’t have a policy—or perhaps haven’t reviewed their policies in a while—there is no time like the present to get a great one in place. Here a  few fundamental issues to keep in mind with respect to a gift acceptance policy:

Not One Size Fits All. A good policy should be crafted to fit an organization’s size, mission and capabilities. While it can make sense to start with another organization’s form, or compare different forms, ultimately an organization needs to adopt a policy that is tailored to its needs. This should be a collaborative process, involving staff, management, the board (or perhaps a board committee responsible for oversight) and the organization’s advisers as needed.

Cover Not Just What, But Who. A policy will set out the types of gifts that will be accepted, and gifts that will not be accepted. It also should set out the questions or procedures that need to followed for particular gifts, because certain gifts (e.g., real estate, closely held business interests) are more risky than others and need to be more carefully evaluated. But don’t forget to cover who needs to be involved in accepting a gift. Some gifts can be accepted by staff, but other gifts should involve the organization’s board or legal counsel. In addition, the organization should consider whether a committee (such as a finance committee, or a dedicated gift acceptance committee) can be involved and responsible for the acceptance of certain gifts.

Remember the Fundamental Purpose. The overarching purpose of the policy is to protect the organization, by giving it the proper framework to evaluate potential gifts and be in the best position to decline gifts that could be too costly or carry other negative ramifications for the organization. Other purposes can be served, such as educating staff/donors or protecting donor relationships, but it is important to keep in mind, when drafting or reviewing the policy, that protecting the organization needs to be first and foremost the main goal.

Careful with Restricted Gifts. An organization should carefully consider its approach to restricted gifts, which carry ongoing obligations. It’s important to establish that the organization won’t accept gifts unrelated to its mission, and the organization should require careful review of restricted gifts to ensure that the desired restriction isn’t too narrow to be useful. It may decide to set up parameters within the policy around certain gifts such as endowments, and also may consider utilizing a mechanism like a variance power to give some flexibility to the organization in the event that a restriction becomes difficult to comply with.

Include Your Standards. The policy should make clear that the organization holds itself to high standards ethically, and will abide by its conflict of interest policy in accepting gifts. Importantly, the policy should also be clear that donors will be encouraged to work with their own legal or financial advisers in order to understand tax consequences of proposed gifts.

Be Mindful of Review. A policy is only good if it is being used, evaluated and  updated with legal developments and any specific changes or additions that the organization determines it needs to make. It is a good idea to review policies annually, and to set out within the policy the timetable and process for doing this. For example, if the organization has a gift acceptance committee, the policy could require the committee to review the policy annually and recommend revisions as needed to the board.

Cover Other Nitty-Gritty. The policy also should cover issues like reporting and acknowledging gifts; valuing gifts; any fees it charges, and fees it generally requires the donor to handle (e.g., appraisals or the donor’s own adviser fees); and IRS reporting.

All in all, a gift acceptance policy is important for an organization to have, and it will serve the organization well to take the time to draft one that is just right—and to keep it updated. This can help the organization avoid taking on a gift that is more work than windfall!