3 Things You Should Do Before Accepting Major Donations
A good way to protect yourself and the reputation of your nonprofit is to make sure you are handling donations that you receive for your nonprofit properly. Here are the three things you should do before accepting major donations:
The IRS only requires that you give a contribution statement to donors that make a donation of over $250. If you are able, I recommend that you issue donor contribution statements for all donations. This is because providing a donor contribution statement documents that the amount received was a donation and that there is no expectation of goods and services in exchange for the amount. It also conveys appreciation for the donation. In addition, it is an opportunity for you to highlight recent accomplishments and describe the impact your nonprofit is making as a result of their donation.
Another best practice is to always provide donors with a receipt after they make a donation. Generally, if they donate through PayPal or other merchant processors, the website will automatically generate a receipt and provide it to them electronically. For accounting purposes, having a receipt on file will help you have accurate records as it relates to the actual funds that were received by your nonprofit as well as the sources of those funds.
If a donor ever approaches you and wants to make a major gift, I would highly recommend that you consider having a nonprofit attorney prepare a Donor Agreement. A Donor Agreement is a legal contract that outlines the terms of a charitable gift. It will lay out the rules for the donation and also make sure that both parties are in compliance with the law. A donor agreement is absolutely critical if the major gift comes with any types of restrictions or stipulations.
If you have any questions about these steps, don’t hesitate to call us today to schedule your free consultation. At Chisholm Law Firm, we have a 100% success rate for our clients. You can rest assured that your nonprofit is in the best hands and that we’ll get everything done right the first time.
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