Gift Agreements for MGOs

Why a Gift Agreement?

"Ethical standards are designed to enable the donor, the charitable organization and the donor’s advisors to structure a gift that achieves a fair and proper balance between the interests of the donor and the purposes of the charitable institution.” - The Preamble of “Model Standards of Practice for the Charitable Gift Planner”

In other words, a well written gift agreement is the best way to ensure that the donor and the organization have the same understanding about and agree to all the various aspects of the major gift.

Gift agreements prevent misunderstandings and are a wonderful way to show your donor how important they are to your organization. 

Any gift that reaches the minimum level of a ‘major gift’ as defined by your organization deserves to have a gift agreement completed and signed.

It will almost always be the MGO who has the first gift agreement discussion with the donor. In fact, many times the MGO will be able to complete the gift agreement without assistance. However, regardless of the size of the gift commitment or how simple the agreement may be, it is imperative the charity identify one person in the organization that will review and approve all gift agreements.

So, what's actually in a gift agreement?

The goals of the written gift agreement should include the following:

1. To clearly set forth the donor’s intentions.
2. To include specific, realistic and measurable restrictions on the charity’s use of the donation. Never overpromise and underdeliver.
3. To provide flexibility in the charity’s use of the funds, under what circumstances may the charity make changes to the use of the funds? 
4. To define how can changes be made? Include the mechanisms for a non-judicial modification of the donor’s restrictions if those circumstances were to arise. 
5. To provide detail as to how the gift will be publically recognized and what ongoing reporting will be provided by the charity to the donor and donors designates.

Here are a few things to keep in mind as you have the conversation(s) with the donor:

1. Are the goals of the donor realistic and achievable?
2. Can you determine if the goals of the donor are short-term or long-term?
3. Are the goals of the donor consistent with the mission of the charity?
4. What are the measures for success of the donor’s goals, both short-term and long-term?
5. Are the donor's short term goals consistent with the charity’s current strategic plan?
6. If the gift supports long term goals will the donor allow any restrictions to be flexible enough to assure the gift remains relevant?
7. Does the gift include naming rights? Is the donor aware of, and agreeable to, the charities guidelines for naming?
8. Is the donor being specific regarding assets to be given and the timing of the gift and its completion? Will the donor agree that the gift agreement will bind the estate of the donor if they should pass before the gift is completed?
9. What are the restrictions which the donor wishes to impose? Is the charity willing to accept those restrictions? Be very specific. Restrictions should be quantifiable or measurable.
10. Is the donor agreeable to the recognition available as defined in the gift acceptance and policy and procedure manual?

To discuss with the donor: 

1. If the donor’s name is to be put on a space or a building, what happens to that recognition when the building is remodeled or is torn down?
2. Will the recognition be given only when the gift has been completed or is it to be given immediately? If recognition is to be given immediately, what happens to that recognition if the commitment is not satisfied in full?
3. What, if any, reports will be provided to the donor or the donor’s family on the charity’s use of the gift? Who receives the report? What is the frequency of the reporting? Will the reports continue in perpetuity or only during the donor’s lifetime?

 

And here's another take on Gift Agreements geared at Organizational Leaders:

Gift Agreements - For Department Leadership

Check out some Sample Gift Agreements Here:

Sample Gift Agreement: Capital

Sample Gift Agreement: Endowments