The Need for Gift Acceptance and Disclosure Policies
The BTHC Foundation is a vehicle through which a donor can support the community. This policy is designed to provide guidance to the public so as to facilitate the gift giving process. The policy is important in ensuring that donors are fully informed so that their gifts are made in a manner that is consistent with their objectives. It clarifies the mission of BTHC Foundation and, along with any specific Fund Agreement, the roles, responsibilities and expectations of both BTHC Foundation and its donors.
A Gift Acceptance Policy also provides guidance for the Foundation Board decision-making. It ensures that gifts to BTHC Foundation are made in accordance with legal and ethical regulations and guidelines, that they promote consistent practices and exercise of fiduciary responsibility, and that they protect BTHC Foundation from unforeseen financial consequences.
And finally, the policy can help to enhance long-term relationships with donors, and encourage donors and Foundation representatives to work together to provide the most effective benefits to our community consistent with donors’ broad philanthropic wishes.
1. BTHC Foundation will abide by all laws governing the charitable sector. In addition, BTHC Foundation endorses the following principles and declares that all donors have these rights:
a. To be informed of BTHC Foundation’s mission, of the way BTHC Foundation intends to use donated resources, of its capacity to use donations effectively for their intended purposes.
b. To be informed of the identity of those serving on BTHC Foundation’s Board of Directors, and to expect the Board to exercise prudent judgement in its stewardship responsibilities.
c. To have access to BTHC Foundation’s most recent financial statements.
d. To be assured their gifts will be used for the purposes for which they were given.
e. To receive appropriate acknowledgement and recognition.
f. To be assured that information about their donations is handled with respect and with confidentiality to the extent provided by law.
g. To expect that all relationships with individuals representing organizations of interest to the donor will be professional in nature.
h. To feel free to ask questions when making a donation and to receive prompt, truthful and forthright answers.
2. Foundation volunteers, friends and staff members are authorized to encourage donors to make outright and deferred gifts. The types of deferred gifts to be offered include bequests, gifts of residual interests, charitable remainder trusts, gifts of life insurance policies and proceeds, and such other gift arrangements as the Board of Directors may from time to time approve. (see Appendix A – Types of Gifts).
3. Persons acting on behalf of BTHC Foundation shall inform, serve, guide or otherwise assist donors who wish to support BTHC Foundation’s activities, but not to engage in actions which might be perceived as inappropriate or directive.
4. Persons acting on behalf of BTHC Foundation, shall, as a preferred practice, encourage the donor to discuss the proposed gift with independent legal and/or tax advisors of the donor’s choice so as to ensure that the donor receives a full and accurate explanation of all aspects of the proposed charitable gift.
5. Staff members, board or executive are authorized to negotiate planned gift agreements with prospective donors, following guidelines approved by the Board of Directors. Gifts will be planned to benefit the community through BTHC Foundation, and to effectively interpret donors’ charitable interests.
6. All fund or gift agreements requiring execution by BTHC Foundation shall first be reviewed and approved as to form and content by BTHC Foundation’s legal counsel. Where substantially the same agreement is used repeatedly, only the prototype needs to be approved.
7. All gift agreements must be reviewed and signed by two Foundation signing authorities. (see Appendix B – Use of the Gift)
8. The Board of Directors reserves the right to decline to accept a gift based on lack of consistency with the Foundation’s mission; desire of the donor to exert unacceptable conditions or controls over disbursement of the net income from the gift; cost-of-ownership implications related to administration time, management and marketability of the gift; unacceptable risks; gifts that are illegal; or other factors agreed to by the Board of Directors.
9. Gift related costs such as legal fees, appraisals, real estate commissions and taxes relating to acceptance, maintenance, management or re-sale of a gift of property, will normally be the responsibility of the donor, unless BTHC Foundation, upon prior agreement, agrees to assume responsibility for any portion of these items.
10. BTHC Foundation may obtain independent assessment of the value of gifts of property.
11. BTHC Foundation will not serve as executor of a donor’s will or trustee of a charitable remainder trust, but may refer the donor to trust institutions that have agreed to provide this service. Foundation staff and Board members, who are executors in their own right, will fully disclose their role in any situation where BTHC Foundation is a charitable beneficiary.
12. Donors’ wishes regarding recognition or anonymity regarding a gift will be respected, provided that any recognition is congruent with the Foundation’s usual standards of practice and legal requirements.
Gift Disclosure Policy:
For tribute gifts (memorial, birthday, anniversary, graduation, etc.) the family is notified of all donors’ names unless the donor wishes to remain anonymous. No individual gifts are divulged; only fund balances.
Types of Gifts
1. Outright Gifts
This is the most common type of giving. Outright gifts, either cash or other property, provide support for a charity’s day-to-day activities, for special projects or if requested to be capital for an endowment fund intended to provide annual income in perpetuity.
The Board of BTHC Foundation establishes guidelines or minimum recommended funding thresholds to establish a named endowment fund.
a. Giving Cash
Gifts of cash, whether by cheque, money order, credit card or direct debit currency, are the most familiar way to contribute an outright gift to a charity. A cheque is considered to have been given on the day it was mailed. (For example, a gift sent by mail, if postmarked in December,
qualifies as a charitable donation in that tax year, even it is not received until January.) Direct debit process requires the donor provide banking information and directions for a specified period of time and for a specified amount.
b. Credit Card Gifts
A gift by credit card is considered to have been made on the date the obligation was incurred.
c. Payroll deductions
Employee payroll deductions are only authorized by the employee in writing to the Financial Administrator. They must be authorized by the employee in writing for a specified period of time and for a specific amount. Payroll deductions can be terminated at any time upon written request of the employee.
d. Gift of Securities
Publicly-traded are securities regularly traded on a public stock exchange. This is the most common form of non-cash gifts and currently receives increased tax benefits. The value of the gift will be the fair market value as determined at the time the gift is received.
Private company shares are not publicly traded and therefore these securities present special consideration.
e. Gifts of Other Appreciated Property
All other gifts of appreciated property may only be accepted after consultation with the Finance Committee. The ready marketability of the property, the carrying costs are among the factors in determining the acceptance of the gift.
f. Life Insurance
The assignment of ownership of an existing life insurance policy will be accepted by BTHC Foundation. A tax receipt will be issued for the cash surrender value of the policy at the time of the donation. The payment of annual premiums is also a gift that generates an official receipt for income tax purposes.
g. Interest Free Loans
Foundations cannot accept this type of gift.
h. Strip Bonds
A corporate or government bond where interest coupons have been stripped away will be accepted. These gifts will not form part of our pooled funds.
2. Deferred gifts
Deferred gifts, where the donor arranges the gift now but retains the use of, or the income from the property, will be accepted. BTHC Foundation’s use of the gift is deferred to a future time.
Many people who would like to make a substantial gift to charity cannot afford to part with assets during their lifetimes. Drawing up a will and directing a portion of one’s estate to charity is the common type of future gift.
1. A general bequest designates a certain dollar amount of property, usually cash, to the charity you select.
2. A specific bequest directs that charity to receive a specific piece of property.
3. A residual bequest designates for the charity all or a portion of whatever remains after all debts, taxes, expenses and other bequests have been paid.
4. A contingent bequest takes effect only under certain conditions.
b. Life Insurance
BTHC Foundation may be the beneficiary of a life insurance policy. A tax receipt will be issued upon receipt of the proceeds of the policy at the time of death.
c. Gift of Retirement Fund Accumulations
Retirement Funds constitute one of the major assets of most people. From time to time and subject to current legislation, BTHC Foundation may benefit from leftover retirement funds where there is advantage in having the charitable tax credit offset the tax on distribution of an RRSP or RRIF.
d. Gift Annuity
BTHC Foundation is not permitted to offer charitable annuity products.
e. Charitable Remainder Trusts
A charitable remainder trust is a deferred giving arrangement under which a donor transfers property (cash, securities or real estate) to a trustee. The donor retains the right to the income from the trust either for life or a specified term of years. BTHC Foundation has irrevocable title to the assets when the donor dies.
f. Gifts of Residual Interest
A gift of residual interest allows the donor to make a gift of property (usually real estate or artwork), get a donation receipt, and retain the use of that property during his/her lifetime. The donor receives a donation receipt for the present value of the “residual interest” they give – irrevocably – to charity. However, the donor remains responsible for maintaining the property that ultimately will go to charity. Capital gains are calculated in a similar fashion to the formula applied to Charitable Remainder Trusts.
Use of the Gifts
1. Types of Funds
Perpetual Fund Only earned interest and dividend income from the investment of this fund may be disbursed annually within guidelines established at Revenue Canada.
Annual Fund 80% of the receipted donations accumulated in this fund must be disbursed within the following year.
2. Restrictions on Gifts
The needs of our community are continually changing and in order to respond effectively to requests, BTHC Foundation prefers gifts that are, at least in part, “undesignated” or specified for a “field of interest.” This allows the Foundation future discretion to support projects as they are identified. However, BTHC
Foundation welcomes gifts for all manner of charitable purposes. Please refer to BTHC Endowment Policy.
3. Benefit to Donor
The nature of any charitable gift is that a donor cannot expect material consideration (financial benefits, or opportunities for other persons not at arm’s length) to flow from the gift, nor, after the gift has been made, to direct BTHC Foundation as to how it must apply the earnings from the gift.
Adopted by the Board March 27, 2006