[MUSIC] The goal of all the previous sections of this course was to bring you to the point where the prospect said, yes. In this lesson, we will look at what you do moving forward from that point. I will lay out how to structure, document, and execute a major gift. At the end of this lesson, you will be able to analyze a gift agreement, recall the essential components of a gift agreement, and practice the process to structure, document, and execute a major gift. Let's get started with this lesson. [MUSIC] Welcome to the sixth and final module in our course on major and principle gift development. In the previous module, we explored the structure and best practices of a successful gift solicitation strategy. In this module, we started having secured a major gift agreement from a donor. We still have a few more steps to make it become a reality for our organization, however. That involves proper gift documentation, compliance with gift acceptance polices, and appropriate stewardship of your donor. After this module, you will be able to analyze and practice the process to structure, document, and execute a major gift and access effectiveness of the stewardship program to retain a major gift prospect. So our prospect said yes, agreeing to make a major gift to our organization. So what comes next? Get it in writing. Establish a gift agreement as quickly as possible. A gift agreement is a formal document between a donor and a recipient. The agreement sets out what the gift is, how it will be given, used, and acknowledged, also how it might be amended in the future. Gift agreements ensure that the donor and recipient understand the nature and purpose of a specific gift. The agreement acts as a reference point for the administration of a gift, especially in the event of any dispute. It ensures that the expectations of our donor and recipient can be met over time, and continue to be met should the original context of the gift change. Gift agreements are not commonly used. They're reserved for large gifts given for specific purposes and for gifts of any size that are accompanied by specific or complex donor requests as to how they should be used. The definition of what constitutes a large gift will depend on the scale of fundraising at your institution or organization. Any gift agreement should be written with the understanding that the donation is a philanthropic gift, given over to the control of the recipient institution. Although the donor can expect the institution to honor his, or her, wishes. It should not be confused with legal contracts that accompany sponsorship agreements. The legal status of a gift agreement may vary from country to country. Consult a legal professional when drafting a gift agreement template. A gift agreement should contain the following. First the names of the party to the agreement, the donor and the recipient, a start date and an end date where applicable. The gift amount, or a description if it is a tangible asset such as art work or equipment. A gift schedule and mode of giving, for example, three installments over three years by a bank transfer. The intended purpose of the gift as specified by the donor. How the recipient intends to fulfill this purpose. How the recipient will acknowledge the gift. It should include any monitoring, reporting, and stewardship activities the recipient intends to undertake. It includes any specific undertaking the recipient has agreed to, such as insuring or investing the gift. A reciprocal clause detailing what action might be taken to protect the reputation of either party should the reputation of the donor or recipient be questioned in the future. And finally, a place for both parties to sign and date the agreement. Approach presenting a gift agreement to donors with sensitivity. Donors may be offended if they receive a document without context. They may misinterpret it as a contract to ensure that they will actually make their donation. Explain to them that a gift agreement simply ensures that the donor's wishes are properly recorded so that they maybe fulfilled to the satisfaction of both parties. How you thank a donor is very important as it influences the whole giving experience. Express your thanks in a way that is appropriate to the scale, frequency, and impact of the gift or gifts you received. Manage donor's expectations, for instance, someone donating $1000 can not expect the same level of public recognition as someone donating $100 million. Ensure that everyone is thanked and that no one is forgotten. Embed gift recognition into stewardship and the entire fundraising cycle to encourage further giving. Ensure that the cost of recognition is proportionate to the value of the contribution being recognized. Ensure that gift recognition is prompt and delivered by the most appropriate method. For instance, a widow giving a gift in memory of her husband should not be thanked in the same way as a young alumnus donating to the annual fund. Ensure that recognizing gifts does not become overwhelmingly time-consuming. Ensure that the right people are offering their thanks in recognition of a donation. For example, a $100 million donor should expect to be thanked by the institution's leader personally. Develop gift recognition policies to suit the culture and circumstances of your organization. They should start with the definition of a gift. Other questions that need to be addressed before writing a policy include, are all gifts assessed on their cash or cash equivalent values? That is, does a gift of a rare stamp collection merit the same recognition as a cash gift of $1,000? At what stage do you account a gift for recognition purposes, when it is pledged or when the money is in the bank? A policy should include an explanation of a basic level of recognition that all donors might expect. For example, your policy may state that a donor will be sent a formal receipt in acknowledgment of his or her donation within seven working days. Often, policies differentiate between the recognition given to gifts of different values. The form of recognition is likely to vary in accordance to the appeal to which the donor is responding. Donors to the football stadium appeal will expect their donation to be related to football in some way. Donors for the library appeal in a different way. Your institution will probably want to negotiate appropriate levels of recognition with principle gift donors on an individual basis. Even so, it is helpful to have some policy guidelines to steer these negotiations. The policy should define what is meant by a principal gift. This might be a gift over a certain value or with the capacity to be transformational for your institution. In the circumstance of principal gifts, the issue of naming rights commonly arises. Any gift recognition policy should have a clause related to naming rights. Many institutions will have a separate naming policy. This clause or policy should be developed in consultation with relevant stakeholders on your campus, such as the marketing and estate development teams. Consideration should be given to the issues such as duration. Will the gift be in perpetuity or limited to a number of years? How will the name be displayed? This will preferably be in line with the corporate branding guidelines of your organization. Whether the name will be included in the marketing materials or on stationary? Under what circumstances the institution reserves the right to remove the name, should it become a reputational risk for the institution in the future? And finally, whether the name can be transferred or discarded should the entity or building it is attached to cease to exist? Some donors prefer to remain anonymous. And your policy should set out how this can be achieved, while still complying with financial and legal obligations surrounding gift reporting. When crafting a recognition policy, it is important to ensure that donors receive no commercial benefit from the recognition you are promising. Such benefits risk their donation being classified as a sponsorship, a situation that can have implications both for the donor and the recipient. For example, suppose an individual donor or company makes a gift to a golf tournament your organization is hosting. If they are simply receiving signage and program recognition, you are fine classifying this as a gift. However, if the agreement includes other items, such as tournament fees, dinner costs, and other costs associated with participating in the tournament, there is a greater likelihood you will need to treat this as a sponsorship and either forego the charitable deduction or have it reduced by the value of the benefits received. It is in the best interest of the institution and its donors, leaders, volunteers, and other constituents to publicly define what are counted as gifts and explain how gifts are reported. Do this in the spirit of transparency, consistency, and accountability. Transparency is also important if fundraising in the educational context is to be perceived and respected as a professional and worthy activity. Primarily, a start-up development officer needs to consider several things. What constitutes a gift? Who's responsible for receiving, recording, and processing gifts? How is the relationship between the development office and finance office defined? Who is responsible for developing accurate accounts? How will issues such as matched funding, foreign currency gifts, and other given variations be handled? What is the policy on unfulfilled gift pledges, do you treat them as debts? What kind of reports do you need for various audiences, your donors, governing bodies, authorities, annual reports, case annual surveys, and so on? Does your institution have the necessary expertise or is an additional recruitment or training required? Are new bank accounts needed? How can income be segregated for specific purposes? How can you integrate different forms of giving and still keep track of everything between online giving, giving with credit cards, checks, bank stock transfers, and cash? How can you reassure donors that they're financial information will be protected? Credit card compliance is a growing national trend with specific requirements being issued by banks for regulatory purposes. These issues should be addressed at the earliest stages of operation before significant levels of fundraising have commenced. Donors need to be confident that the institution can handle their donations effectively and safely. Mistakes in gift accounting can lead to serious reputational damage. Work closely with your accounting team to ensure detailed gift tracking.
