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Gift Acceptance Policy

The following is from the Community Foundation of Harford County Gift Acceptance Policy. For a full copy of the policy, contact CFHC.

Types of Gifts

The following gifts may be deemed to be acceptable:

  1. Cash and Cash Equivalents
  2. Tangible Personal Property
  3. Securities (marketable or non-marketable)
  4. Real Estate
  5. Remainder Interests in Property
  6. Oil, Gas, and Mineral Interests
  7. Bargain Sales
  8. Life Insurance
  9. Royalties, Distribution Rights
  10. Charitable Gift Annuities
  11. Charitable Remainder Trusts
  12. Charitable Lead Trusts
  13. Retirement Plan Beneficiary Designations
  14. Bequests
  15. Life Insurance Beneficiary Designations

The following criteria govern the acceptance of each gift form:

  1. Cash and Cash Equivalents: Cash is acceptable in any form. Checks shall be made payable to the Community Foundation of Harford County and shall be delivered to the The Community Foundation's administrative offices. Cash equivalents include certificates of deposit or other assets readily converted to a stable, determinable cash value.
  2. Tangible Personal Property: All other gifts of tangible personal property shall be examined in light of the following criteria and the criteria identified on the Gift Acceptance Checklist, Appendix B (not included):
    • Does the property fulfill the mission of The Community Foundation?
    • Is the property marketable?
    • Has the donor obtained a qualified appraisal for the property in compliance with IRS requirements and supplied The Community Foundation with a copy of the appraisal if necessary?
    • Are there any undue restrictions on the use, display, or sale of the property?
    • Are there any carrying costs or liability for the property?
    The final determination on the acceptance of other tangible property gifts shall be made by the Ad Hoc Gift Approval Committee of The Community Foundation.
  3. Securities: The Community Foundation can accept both publicly traded securities and closely held securities.

    a. Publicly Traded Securities: Marketable securities may be transferred to an account maintained at one or more financial institutions or delivered physically with the transferor's signature or stock power attached. As a general rule, all marketable securities shall be sold upon receipt. In some cases marketable securities may be restricted by applicable securities laws (i.e. § 144 stock); in such instance the final determination on the acceptance of the restricted securities shall be made according to the Gift Approval Process outlined in Section VI of this document.

    Options and Other Rights in Securities: The Community Foundation may receive warrants, stock options, and stock appreciation rights only upon review and acceptance of the Ad Hoc Gift Approval Committee. In considering acceptance, the committee must consider the following issues:

    • Is The Community Foundation required to advance funds upon exercise of the gift? If so, does The Community Foundation have the required funds?
    • Is The Community Foundation at risk of loss of funds in accepting the gift?
    • Are the rights restricted? And if so, does the restriction affect the ability of The Community Foundation to dispose of the asset? Does the restriction materially impact the value of the gift to The Community Foundation?
    • Will acceptance of the gift and/or exercise of the option trigger any tax consequences to the donor?

    b. Closely Held Securities: Closely held securities, which include not only debt and equity positions in non-publicly traded companies but also interests in LLPs and LLCs or other ownership forms, can be accepted subject to the approval of the Ad Hoc Gift Approval Committee of The Community Foundation. Interest in any closely held entity requires legal documentation (such as Partnership and Operating Agreements) setting forth the rights and legal obligations of the owner. The Community Foundation will not accept general partnership interests because of potential liability. However, gifts will be reviewed prior to acceptance using the following checklist and the criteria identified on the Gift Acceptance Checklist, Appendix B (not included):

    • What type of entity is represented by the gift? (For example, C Corporation, S Corporation, LLC, LLP.)
    • Will the security generate unrelated business taxable income to The Community Foundation? If so, does The Community Foundation have the funds to pay this tax?
    • Will the gift trigger any negative tax consequences to the donor? (If the donor is unsure, he should be advised to talk with his accountant.)
    • Are there restrictions on the security that would prevent The Community Foundation from ultimately converting those assets to cash? Does the restriction materially impact the value of the gift to The Community Foundation?
    • Describe the operation of the company. Does it create a legal or public relations liability for The Community Foundation?
    • Is the security marketable? If so, describe the market for sale, and estimated time required for sale.

    Closely held C Corporation stock is generally acceptable on condition that The Community Foundation assumes no liability by accepting it, the corporation's buy-back policies are acceptable, there is an expectation to liquidate the stock in a reasonable timeframe, and that no monies will be dispersed from a fund until such time as the stock is liquidated.

    The initial acceptance of a closely held stock requires Ad Hoc Gift Approval Committee approval. After a closely held stock has been "approved" for acceptance by the Gift Acceptance Committee, future gifts of that same closely held stock are deemed to be acceptable so long as the conditions under which future gifts are made do not vary in substance.

    If potential problems arise on initial review of the security, further review and recommendation by an outside professional may be sought before making a final decision on acceptance of the gift. It is generally the goal of The Community Foundation to sell non-marketable securities within a reasonable timeframe unless the income that is generated is sufficient to justify holding them.

  4. Real Estate: The Community Foundation will accept gifts of real estate that include developed property, undeveloped property, or gifts subject to a prior life interest, from time to time as appropriate. Prior to the acceptance of real estate, The Community Foundation shall require an initial environmental review of the property to ensure that the property is not contaminated with environmental damage. Environmental inspection forms are attached as an appendix to this document. In the event that the initial inspection reveals a potential problem, The Community Foundation shall retain a qualified inspection firm to conduct an environmental audit. The cost of the environmental audits shall generally be an expense of the donor.

    Where appropriate, a title binder shall be obtained by The Community Foundation prior to the acceptance of the real property gift. The cost of this title binder shall generally be an expense of the donor.

    Prior to acceptance of the real property, the gift shall be approved by the Ad Hoc Gift Approval Committee of The Community Foundation and by The Community Foundation's legal counsel. Queries for acceptance of the property shall include:

    • Does the environmental audit reflect the property is undamaged?
    • Is the property useful for the purposes of The Community Foundation?
    • Is the use or image of the property consistent with The Community Foundation's purposes?
    • Is the property marketable? If so, describe the market and estimated time of sale.
    • Are there any restrictions, reservations, easements, or other limitations associated with the property?
    • Are there carrying costs, which may include insurance, property taxes, mortgages, or notes, etc., associated with the property? Provide an estimated budget for the period expected until sale.
  5. Remainder Interests In Property: The Community Foundation will accept a remainder interest in a personal residence, farm, or vacation home subject to the provisions of Section 4 above. The donor or other occupants may continue to occupy the real property for the duration of the stated life. At the death of the donor, The Community Foundation may use the property or reduce it to cash. Where The Community Foundation receives a gift of a remainder interest, the following expenses are generally to be paid by the donor or primary beneficiary:

    • Payment of utilities
    • Pest control
    • Lawn/landscaping maintenance
    • Homeowners insurance (including liability)
    • Cosmetic changes such as redecorating, painting, wallpapering, etc.
    • Maintenance, repair and replacement of personal property
    • General maintenance, repair and upkeep of property
    • Property taxes
    • Amortization of debt on property
  6. Oil, Gas, and Mineral Interests: The Community Foundation may accept oil, gas, or mineral property interests, where appropriate. Prior to acceptance of an oil, gas, or mineral interest the gift shall be approved by the Ad Hoc Gift Approval Committee, and by The Community Foundation's legal counsel. Criteria for acceptance of the property shall include:

    • Do the surface rights have a value of $20,000 or greater? (Provide a copy of the qualified appraisal.)
    • Does the gift of oil, gas or mineral interest generate at least $3,000 per year in royalties or other income (as determined by the average of the three years prior to the gift)? (Provide income from last three years.)
    • What is the form of the interest? The Community Foundation will not accept general partnership interests. If the interest is a Sub-S corporation, or working interest generating unrelated business taxable income, project the tax cost upon sale of the asset.
    • Is there environmental liability associated with receipt of the asset?
    • Is the asset readily marketable? If so, describe the market and estimated timetable for sale.

    Oil, gas, and mineral interests shall be sold as soon as practical upon receipt unless the income generated from holding the interests is deemed sufficient to justify holding them. No monies will be distributed from a fund until the oil, gas, or mineral interest is liquidated and fees have been assessed in arrears.

  7. Bargain Sales: A bargain sale is a hybrid of a gift and a sale. In essence, the donor who sells an asset to a charity at a price that is less than the property's fair market value intends to make a gift of the discounted portion of the selling price. The Community Foundation will enter into a bargain sale arrangement in instances in which the bargain sale furthers the mission and purposes of The Community Foundation. All bargain sales must be reviewed and recommended by the Ad Hoc Gift Approval Committee and approved by the Board of Directors. Factors used in determining the appropriateness of the transaction include:

    • The Community Foundation must receive an independent appraisal substantiating the value of the property, validity of the title, and any possible environmental liability.
    • If The Community Foundation assumes debt with the property, the debt ratio must be less than 50% of the appraised market value.
    • The Community Foundation must determine that it will use the property, or that there is a market for sale of the property allowing sale within 12 months of receipt.
    • The Community Foundation must calculate the costs to safeguard, insure, and expense the property (including property tax, if applicable) during the holding period and adjust the estimated value by such amount.
  8. Life Insurance: The Community Foundation must be named as both beneficiary and irrevocable owner of an insurance policy before a life insurance policy can be recorded as a completed gift. The gift is valued at its interpolated terminal reserve value, or cash surrender value, upon receipt. If the donor contributes future premium payments, The Community Foundation will include the entire amount of the additional premium payment as a gift in the year that it is made.

    If the donor does not elect to continue to make gifts to cover premium payments on the life insurance policy, The Community Foundation may:

    • Continue to pay the premiums.
    • Convert the policy to paid up insurance.
    • Surrender the policy for its current cash value.
  9. Royalties, Distribution Rights: The Community Foundation accepts gifts of royalties or distribution rights on published works (such as books or films) where there is clear evidence of marketability or assurance of an income stream.

  10. Charitable Gift Annuities: The Community Foundation may offer charitable gift annuities. The minimum gift for funding is $10,000. The minimum age for life income beneficiaries of a gift annuity shall be 65, with a suggested threshold of 70. Where a deferred gift annuity is offered, the minimum age for life income beneficiaries shall be 60, with a suggested threshold of 65. No more than two life income beneficiaries will be permitted for any gift annuity.

    The annuity stream shall be based on the rates published by the American Council on Gift Annuities in effect at the date of execution of the contract. The Community Foundation may execute a contract at a rate that is less than the published rates at the request of the donor, but may not execute a contract that is in higher than those rates. Annuity payments may be made on a quarterly, semi-annual, or annual schedule.

    The Community Foundation may accept real estate, tangible personal property, or any other illiquid assets in exchange for current charitable gift annuities according to the Gift Approval Process and provided that the property has been sufficiently discounted to insure that the liquidation value exceeds the Charitable Gift Annuity commitment including all holding and carrying costs associated with the liquidation of the asset.

    Funds contributed in exchange for a gift annuity shall be set aside and invested during the term of the annuity payments. Once those payments have terminated, the funds representing the remaining principal contributed in exchange for the gift annuity shall be added to The Community Foundation's Unrestricted Funds, or to such specific fund as designated by the Donor.

  11. Charitable Remainder Trusts: The Community Foundation accepts revocable or irrevocable beneficiary appointments under charitable remainder trusts. These appointments may be for The Community Foundation's Unrestricted Funds, for any of its component funds or for a non-component supporting organization (foundation).

  12. Charitable Lead Trusts: The Community Foundation accepts income distributions from charitable lead trusts. These distributions may be assigned to The Community Foundation's Unrestricted Funds, for any of its component funds, or for a non-component supporting foundation.

  13. Retirement Plan Beneficiary Designations: Donors and supporters of The Community Foundation shall be encouraged to name The Community Foundation as beneficiary of their retirement plans. Such designations shall not be recorded as gifts to The Community Foundation until such time as the gift is irrevocable. Where the gift is irrevocable, but is not due until a future date, the present value of that gift will be recorded at the time the gift becomes irrevocable. These appointments may be for The Community Foundation's Unrestricted Funds, for any of its component funds or for a non-component supporting foundation.

  14. Bequests: Donors and supporters of The Community Foundation shall be encouraged to make bequests to The Community Foundation under their wills and trusts. Such bequests shall not be recorded as gifts to The Community Foundation until such time as the gift is irrevocable. Where the gift is irrevocable, but is not due until a future date, the present value of that gift may be recorded at the time the gift becomes irrevocable, if The Community Foundation knows the amount of the bequest. These appointments may be for The Community Foundation's Unrestricted Funds, for any of its component funds or for a non-component supporting foundation.

  15. Life Insurance Beneficiary Designations: Donors and supporters of The Community Foundation shall be encouraged to name The Community Foundation as beneficiary or contingent beneficiary of their life insurance policies. Such designations shall not be recorded as gifts to The Community Foundation until such time as the gift is irrevocable. Where the gift is irrevocable, but is not due until a future date, the present value of that gift will be recorded at the time the gift becomes irrevocable. These appointments may be for The Community Foundation's Unrestricted Funds, for any of its component funds or for a non-component supporting foundation.

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