The MDI Board of Directors’ Resource Development Committee, in affirming its commitment to creating exemplary philanthropic practices, has established the following Gift Acceptance Policy (“GAP”). To prevent misunderstandings, these guidelines should be carefully reviewed when unusual fundraising situations arise. Resolution of such situations must be consistent with MDI’s mission and policies, including this Gift Acceptance Policy.
The Resource Development Committee of the Board of Directors is responsible for formulating, implementing and amending the gift acceptance policies.
Board members may provide recommendations to the Resource Development Committee regarding gift situations that require special review, but otherwise do not have oversight responsibilities relating to gift acquisitions.
The Resource Development Committee may be convened in person or electronically by its chairperson as needed and will endeavor to respond promptly so that the gift can be completed in a timely manner to ensure donor good will.
MDI Acceptance of Gifts and Grants
MDI accepts charitable gifts provided such gifts are in conformity with the Gift Acceptance Policy. Those individuals designated to accept or negotiate gifts should follow the guidelines set forth in this policy. Once MDI has accepted a gift, it becomes MDI property. From this point, the donor has no direct decision-making power regarding the disposition of the gift.
Once MDI has accepted a gift, the responsible development staff must immediately record the gift in electronic donor records and process the gift for deposit or appropriate disposition. All conversations and meetings related to the solicitation of gifts are also required to be immediately recorded in MDI’s electronic donor records, including specialized donor software and general ledger accounts. The highest level of donor confidentiality will be maintained.
For tax purposes, a gift is defined as a voluntary transfer of assets from a person or an organization to MDI where no goods or services are expected, implied or forthcoming for the donor. Gifts usually take the form of cash, securities, real property or personal property. The following criteria generally identify a gift:
o A gift is motivated by charitable intent;
o Gifts are irrevocable transfers of assets. MDI is not obliged to return unexpended funds. (If, for some reason, MDI is unable to comply with the donor’s intent, or if the gift has been misdirected to MDI, a return of gift may be issued at MDI’s discretion. Out-of-pocket expenses may be deducted from the gift before it is returned.);
o Gifts generally are not subject to an exchange of consideration or other contractual duties between MDI and the donor, except for certain deferred gifts.
A gift may be either unrestricted or restricted to a general area of use that contributes to the benefit of MDI or one of programs. MDI is committed to honoring donors’ philanthropic intentions consistent with its mission and program needs. Restriction(s) placed on the use of the funds contributed to MDI may be rendered illegal, unreasonable or unable to be fulfilled due to circumstances including, but not limited to: the termination of a program; a surplus of funds available from other sources to fulfill the designated purpose; the insufficiency of the restricted funds to fulfill the designated purpose where no funds from other sources are available to supplement the restricted funds; or the designated purpose is no longer consistent with the mission of MDI and its individual programs.
For gifts less than $10,000, the Director of Development may redirect the funding to a comparable need, consistent with the donor’s intent. For gifts greater than $10,000, if the donor(s) are unavailable to alter the account restriction(s), the responsible development staff, if reasonably practical, shall consult with donor’s representative to restructure the gift. If a representative is unavailable, MDI shall consult with the President to determine a comparable funding need, consistent with the donor’s intent.
Gift Acceptance Conditions
MDI seeks to be an outstanding leader in philanthropy, encouraging generosity among its stakeholders to support the current and long-term needs of the employees with disabilities we serve. MDI is committed to serving as a steward of our donors’ charitable intentions, and will make its best efforts to preserve, manage, and grow financial assets to provide a competitive return to benefit our facilities and their programmatic needs.
Unless otherwise restricted in writing by the donor, all planned gifts received by MDI, whether they be from will bequests, life insurance or retirement account beneficiary stipulation, trust or annuity agreements, will be used consistent with approved operational needs.
MDI will accept only gifts that are consistent with the core values and are:
- compatible with the mission of MDI and its individual programs;
- in compliance with the Internal Revenue Code of 1986, as amended, “IRC” and other federal statutes, regulations, rulings, or related court decisions;
- in compliance with all Minnesota state regulations; and compatible with MDI’s tax-exempt status.
Unless a specific exception is granted by the Resource Development Committee, MDI will not accept any gift that:
- violates any federal, state or local statute or ordinance;
- requires any action on the part of MDI that is unacceptable to the Board of Directors;
- requires MDI and its administration to employ a specified person at a future date;
- contains unreasonable conditions (i.e. a lien or other encumbrance) on gifts of partial interests and property;
- exposes MDI to litigation or other liabilities;
- requires the payment of maintenance costs or other expenses for which no specific provision has been made;
- generates unrelated business income tax;
- inhibits MDI from seeking gifts from other donors;
- includes real estate subject to debt exceeding 50% of its value, or
- appears to be financially unsound.
Unless a specific exception is granted by the Resource Development Committee, MDI will immediately sell all gifts of stock or property so that it can invest the proceeds in accordance with MDI’s investment policies.
A. Finder’s Fees or Commissions: No finder’s fee or commission will be paid by MDI in connection with the completion of a gift to MDI without the prior written approval of the Resource Development Committee.
B. Professional Fees: Reasonable costs of gift acquisition, such as transaction costs and professional fees, normally will be borne by the donor. However, there may be occasions when MDI may pay such costs. MDI will verify the reasonableness of the costs. If appropriate, MDI may agree to cover gift acquisition costs from its operating budget.
C. Administrative Fees: To the extent permitted by law, MDI reserves the right to levy an administrative fee or trustee fee on endowment accounts, life income plans, and charitable trusts. MDI and the Resource Development Committee will establish fees annually based on MDI’s actual cost of administration of gifts.
All appraisals of real and personal property contributed to MDI shall be done in accordance with IRS Publication 561, “Determining the Value of Donated Property.” A real property valuation should be prepared by an MAI appraiser. A qualified appraiser acceptable to MDI should appraise personal property. Expenses incurred to obtain an appraisal shall be the responsibility of the donor unless special circumstances exist that make it appropriate for MDI to share the cost.
A. Donor’s Use of Professional Advisers: All prospective donors will be urged to seek their own counsel in matters of estate planning, taxes and planned gifts. It is not the province of the development department to give legal advice, which function is for the donor’s counsel who alone must bear responsibility for all legal conclusions and advice. If the prospective donor has not yet established a relationship with a qualified professional adviser, representatives of the development department may refer the prospective donor to qualified professionals. The professional receiving the referral must understand that the professional is being retained by the prospective donor to represent the prospective donor’s interests, not the MDI’s interests.
B. MDI’s Use of Legal Counsel: All specimen agreements of The Resource Development Committee shall be reviewed by MDI legal counsel.
MDI will acknowledge the receipt of all gifts in writing to satisfy the IRS’s substantiation requirements set forth in IRS Code Section 170(f) for the deduction of charitable gifts by individual donors. MDI will disclose information about the operation of annuities and trust arrangements to donors prior to and at the time of the gift.
MDI staff directly responsible for the solicitation of the gift must prepare a gift acknowledgement letter and send it within three business days of the gift. Additional letters of thanks may be sent subsequently, signed by other MDI development staff, as appropriate.
Types of Acceptable Gifts
Gifts are either outright or deferred. The most common gifts to MDI are outright gifts. In addition to cash gifts, MDI accepts gifts of securities, real property, and personal property. Deferred gifts, also called planned gifts, are arranged with the development department during the donor’s lifetime, but the benefits to MDI do not accrue until a later time, usually after the death of the donor or his/her beneficiaries. Bequests are the most common deferred gift. Other such gifts include naming MDI as the beneficiary of a life insurance policy, a qualified retirement plan, a charitable gift annuity or a life income agreement.
MDI has approved the following types of gifts subject to the guidelines and policies set forth below and established policies to be followed in the solicitation and acceptance of gifts and grants.
A. Outright Gifts
1. Cash and Checks – no approvals are needed from the Resource Development Committee
a. Policy –Cash and checks shall be accepted at face value.
b. Guidelines –Checks shall be made payable to MDI. MDI will have an Unrestricted Fund, Temporarily Restricted Fund, and a Permanently Restricted Fund, and other Funds, as requested, dedicated to the financial needs of MDI.
2. Publicly-Traded Securities – no approvals are needed from Resource Development Committee
a. Policy –Publicly-traded securities, corporate bonds; government securities may all be accepted at the average of the high and low of the stock(s) or bond(s) on the day the transfer. The value of less actively traded securities should be determined according to IRS Publication 561.
b. Guidelines –MDI shall sell such securities as soon as possible after the securities have been transferred to MDI.
3. Closely Held Securities — requires prior approval by the Resource Development Committee
a. Policy –Closely held or non-publicly traded securities, sole proprietorships, general or limited partnership interests, S-Corporation securities, interests in real estate investment trusts (“REITs”) and limited liability company interests may be approved by the Resource Development Committee.
b. Guidelines — For closely held stock, IRS Publication 561 should be followed. Unless there is an active market for a security, if the value of the gift is estimated to be $5,000 or more, the donor shall provide a documented appraisal prepared by a qualified appraiser.
The Resource Development Committee will consider the marketability of closely-held securities before accepting such a gift. It is the intention of MDI to sell all securities as soon as possible after the transfer from the donor. If it appears that a gift of closely-held securities will take longer than one year to sell, the Resource Development Committee may decline the gift.
4. Restricted Securities – requires prior approval by the Resource Development Committee
a. Policy –Restricted securities (also known as unregistered securities, investment-letter stock, control stock or private placement stock) are infrequently given as gifts because of the difficulty in transferring ownership and determining fair market value. They may be accepted only after approval by the Resource Development Committee.
b. Guidelines –For restricted securities, IRS Publication 561 should be consulted when determining the value of the securities. If the value of the gift is estimated to be $5,000 or more, the donor shall provide an appraisal report prepared by a qualified appraiser.
5. Mutual Fund Shares – no approvals are needed by the Resource Development Committee
a. Policy –Mutual fund shares may be accepted at fair market value on the date of the gift.
b. Guidelines –If such a price is not readily available, then the value shall be determined as if the shares were untraded securities in IRS Publication 561. MDI shall sell such securities as soon as possible after the securities have been transferred to MDI.
6. Gifts of Real Property — requires prior approval by the Resource Development Committee
a. Policy – MDI may accept gifts of real property, both improved and unimproved.
b. Guidelines – The Resource Development Committee will require the following in order to review a gift of real property:
- A preliminary title report clear of unacceptable encumbrances by a title insurance company;
- An MAI appraisal by a qualified appraiser and on-site review by MDI development staff;
- A phase one environmental audit indicating that ownership will not expose MDI to environmental liabilities;
- The Resource Development Committee may waive the phase one requirement for non-farm residential properties;
- A market feasibility study for purposes of liquidation;
- A structural engineering report (when applicable);
- A review of leases (for commercial properties), and
- A disclosure statement for residential properties (when applicable).
Under Treasury regulations, a donor must pay for any initial appraisal made on the property. Unless waived by the Resource Development Committee, it is the responsibility of a donor to cover all the costs involved in an environmental impact study, title search, and any other related studies.
Special attention shall be given to the receipt of real estate encumbered by a mortgage. MDI’s ownership of such property may give rise to unrelated business income tax and disqualification of certain split interest gifts unless handled in a proper manner.
7. Property with Retained Life Estates or Other Restrictions – requires prior approval by the Resource Development Committee
a. Policy — MDI may accept either a gift of real property with a retained life estate or subject to other interest(s) for terms of years, or other limitations as to timing of the interest or use or sale restrictions.
b. Description — A gift of real property with a retained life estate involves the transfer of the title to a personal residence, farm or timberland to MDI whereby the donor or another person retains use of the property for a term of years or the life/lives of the donor and/or another person.
c. Guidelines — Such gifts are subject to the guidelines for acceptance of outright gifts of real property as set forth in Subsection 6 Gifts of Real Property. The agreement creating the life interest must provide that the donor and/or life tenant shall remain responsible for the payment of mortgages, taxes, insurance, utilities, maintenance/repairs and other costs associated with the property, unless other specific provisions are made for the payment of these expenses.
8. Tangible Personal Property — requires prior approval by the Resource Development Committee for gifts of $5,000 or more
a. Policy – The Director of Development may accept gifts of tangible personal property, including but not limited to, works of art, manuscripts, literary works, boats, motor vehicles, and computer hardware, only after a review indicates that the property is readily marketable. All such property will be sold and the proceeds will be used to meet operational needs of the facility.
b. Guidelines — Gifts of tangible personal property valued at more than $5,000 must be reviewed and approved by the Resource Development Committee. No perishable property or property that would require special facilities or security to be properly safeguarded shall be accepted without prior approval of the Resource Development Committee.
For tangible personal property with an estimated fair market value in excess of $250, the donor must furnish the development department with the following information:
- Donor’s name, address, and telephone number;
- Contact person if the donor is a corporation;
- Donor’s social security number or federal tax identification number;
- Brief physical description of the donated asset;
- If appropriate, a lien search in the state where the asset is located and, if different, the state(s) where the donor resides or conducts business which involves the asset, and
- An independent evaluation from a qualified appraiser of the donated asset, or verifiable data that demonstrates the market value of the asset on the date of the contribution.
9. Bargain Sale — requires prior approval by the Resource Development Committee
a. Policy –MDI, upon review and approval of the Resource Development Committee and legal counsel, may purchase real estate, securities, or other property on a bargain sale basis.
b. Description –A “bargain sale” is a sale of property to MDI for an amount less than the property’s current fair market value. The excess of the value over the sales price represents a contribution.
c. Guidelines –The bargain sale price may be paid either in a lump sum or in installments. If the property being sold is real property, the guidelines for the acceptance of such a gift as set forth in Section 6 above shall apply.
10. Other Personal Property —- requires prior approval by the Resource Development Committee
a. Policy –Other personal property of any description, including mortgages, notes, copyrights, royalties, partnership interests, closely held business interests, undivided interests in property, future and partial interests, and other illiquid financial assets, may be accepted.
b. Guidelines –The development staff will prepare a written summary of the gift proposal for the Resource Development Committee. At a minimum, the summary shall include the following:
- Description of the asset, gift purpose (e.g., an unrestricted, restricted gift or deferred gift) and how the residence will benefit;
- An appraisal of the asset’s fair market value and marketability;
- Potential for income and expenses, encumbrances, and carrying costs prior to disposition;
- Any environmental risks or problems revealed by audit or survey;
- Credit history or financial statement of financially responsible party, if applicable, and
- Any special arrangements requested by the donor concerning disposition (e.g., price considerations, time duration prior to disposition, etc.)
The Resource Development Committee will review the material presented by the development staff and either accept or reject the proposed gift with a majority vote.
B. Gifts-in-Kind — no approvals are needed by the Resource Development Committee
a. Policy –MDI welcome donations of “gifts-in-kind”, non-cash donations of tangible items meant to be used and not resold, that suit the best interests of the donor and MDI. However, because of limited space and esthetic considerations, not all donations may ultimately be accepted.
b. Guidelines –The gift must benefit MDI and fit with MDI’s mission, plans, and priorities.
1. Gifts-in-kind are accepted only with the understanding that once received they are wholly owned by MDI, which will utilize, store, or appropriately dispose of gifts-in-kind at its discretion. Such assets could be sold with the proceeds being used to support MDI’s mission.
2. Gifts requiring additional space, renovation, fixed installation, utility hook-ups, or other services must be approved by appropriate environmental management staff of the facility.
3. Gifts with environmental, health, and safety impacts are approved by the appropriate safety committee of the recipient facility.
4. MDI, as an interested party, cannot place a monetary value on any gift. A professional appraiser must evaluate the gift if its value is over $250. The appraisal is the responsibility of the donor.
5. Sometimes, when a gift-in-kind has been made, MDI has the obligation to provide maintenance on the item. The maintenance can involve added expenses annually. Donors may be invited to provide a supplemental contribution to underwrite on-going maintenance costs.
C. Deferred Gifts
1. Bequests – no approvals are needed by the Gift Acceptance Committee
a. Policy –Direct, unencumbered bequests shall be accepted by the development department without prior approval of the Gift Acceptance Committee if the underlying assets are in conformance with the guidelines set forth in Section A. Outright Gifts. If the underlying assets are not in conformance with the guidelines, the bequest shall be referred to the Resource Development Committee for review. MDI reserves the right to disclaim gifts from the estates or trusts of deceased donors that are not in keeping with the terms of this policy.
b. Description –A bequest is made in the donor’s will or revocable trust. The donor can designate a specific intent, a specific item, a specific amount, a percentage, or the remainder of an estate to MDI.
c. Guidelines –Donors should be encouraged to notify the development department when considering a bequest in order to ensure that the assets left to MDI meet the criteria set forth in this gift acceptance policy and to ensure that the donor’s wishes are carried out.
2. Charitable Gift Annuities – no approvals are needed by the Resource Development Committee if donor meets age requirements
a. Policy –Charitable gift annuities can be accepted by MDI without prior review and approval by the Resource Development Committee.
b. Description –A charitable gift annuity is a contract between MDI and the donor. MDI agrees to pay the donor (or other person named by the donor) a lifetime annuity in return for a gift of cash, securities, or other property. The payment may continue for the life of a second individual, such as a spouse. The annual payment is a fixed sum, the amount of which is based on the size of the gift and the number and ages of the beneficiaries.
c. Guidelines –The minimum contribution amount for a gift annuity is $5,000, unless the donor contributes other funding totaling the $5,000 gift amount within a two-year time period. The rates of return payable to annuitants shall not exceed those recommended by the American Council on Gift Annuities as of the date of contribution. Annuity
agreements shall be limited to two lives. Generally, the minimum age for the annuitants shall be 60 for immediate annuities and 45 for deferred annuities. Exceptions may be made subject to the prior approval of the Resource Development Committee. Gift annuities shall be managed by MDI, and MDI may employ agents and advisors to assist with the administration and investment of gift annuity assets.
3. Charitable Remainder Trusts –approvals are needed by the Resource Development Committee
a. Policy –MDI shall not accept a charitable remainder trust without prior review and approval of the Resource Development Committee. Where the trust is testamentary, that is, one that arises upon the death of the donor, MDI reserves the right to disclaim any interest that would be in violation of this gift acceptance policy.
b. Description –A charitable remainder trust is an irrevocable trust created either during the life of the donor or through the donor’s will or trust. The trust must provide that a specified sum (not less than 5%) of the trust’s value is paid to one or more beneficiaries on an annual or more frequent basis. At least one beneficiary must not be a charitable beneficiary. In order to qualify as a charitable remainder unitrust, the trust must meet all of the requirements set forth in IRC Section 664, and related regulations.
c. Guidelines –MDI will retain professional assistance to trustee charitable remainder trusts. The initial contribution to the charitable remainder trust shall be at least $100,000 unless the Resource Development Committee waives this requirement. Where payments are to be made for the lives of multiple beneficiaries, there may be no more than two.
4. Charitable Lead Trusts –approvals are needed by the Resource Development Committee
a. Policy –Charitable lead trusts shall not be accepted by MDI without prior review and approval of the trust agreement by the Resource Development Committee. Where the trust is testamentary, that is, one that arises upon the death of the donor, MDI reserves the right to disclaim any interest that would be in violation of this gift acceptance policy.
b. Description –A charitable lead trust is a trust in which the income, or “lead” interest, is paid to MDI and the “remainder” interest is given to one or more non-charitable beneficiaries, who could be either the donor or family members. The amount paid to MDI may be either a fixed sum (an “annuity trust” interest) or a percentage of the trust assets as valued each year (a “unitrust” interest). At the conclusion of the payment period, the trust assets are returned either to the donor or to someone designated by the donor.
c. Guidelines –MDI will retain professional assistance for charitable lead trusts, each of which having the initial contribution of at least $100,000. A trust may be funded with a smaller amount, subject to prior approval of the Resource Development Committee. The trust term may be at the discretion of the donor, subject to the approval of the Resource Development Committee.
5. Designating MDI as Beneficiary no approvals are needed by the Resource Development Committee, unless part of a trust arrangement
a. Policy –MDI will accept any proceeds that it receives as a designated beneficiary (or an alternate beneficiary) of a life insurance policy, a deferred annuity contract, an IRA, a defined benefit plan, a 401 (k) plan, a defined contribution (profit sharing) plan or other qualified plan without prior review and approval of the Resource Development Committee, unless the designation imposes restrictions or a trust arrangement, in which case, Resource Development Committee prior review and approval is required.
6. Life Insurance Policies – no approvals are needed by the Resource Development Committee, if meets criteria
a. Policy –MDI will accept, without the necessity of prior review and approval by the Resource Development Committee, gifts of life insurance policies, including whole life, variable and universal life policies, which meet the guidelines specified below.
b. Guidelines –Gifts of life insurance policies which meet the following two criteria may be accepted without prior Resource Development Committee approval. If a proposed life insurance policy gift does not meet the criteria listed below, it must be reviewed by the Resource Development Committee before being accepted.
- The policy is paid-up.
- MDI is designated as the owner and the beneficiary of the policy. While the policy will identify MDI as the beneficiary, the development staff should work with the donor to clarify the purpose of the gift by attachment of a memorandum, letter, or account agreement to the policy.
Policy Amendment and Review
This Gift Acceptance Policy was reviewed and approved by the MDI Board of Directors. The Resource Development Committee shall review these policies if requested by the President or Director of Development or whenever it becomes inconsistent with Treasury regulations or other applicable state or federal laws. Changes shall be submitted to the Board for review and approval.