Why nonprofits may not accept a financial contribution

Corporate fundraising

Few people would argue that the greatest need of all nonprofit organizations is unrestricted revenue. The constant flow of money enables the nonprofit to fulfill its mission of addressing critical needs. 

Fundraising is critical to a charity’s success

Fundraising is a high priority for all nonprofits. Most have teams of employees dedicated to fundraising either through grants, events, sponsorships, cause marketing, workplace giving, and matching gift programs. Even smaller nonprofit organizations actively seek contributions of all types even with their limited resources. Contributions are the lifeline of all nonprofit organizations.

Some would shudder to think that some nonprofits don’t accept all contributions. The question has become, should a nonprofit accept every gift that comes its way? It’s certainly hard to say ‘no thank you!’ to donors, but sometimes…that’s the more prudent path.

Reasons why a charity rejects corporate donations

For this blog, we ask the question, why would a charity reject a cash donation from a legitimate corporation? Although it may seem counterintuitive, some potential gifts serve an organization better if they were refused! For example, a potential gift might include hidden costs, burdening and draining the accepting organization of resources that could be used to develop other resources or support the mission. Gift acceptance may also accompany implied endorsement of a company’s product or mission.

There are two primary reasons why a nonprofit might deem it appropriate to reject a contribution.

  1. A donation might be inappropriate or require resources that the nonprofit is not equipped to provide. Examples of this include in-kind donations. Very few nonprofit organizations will keep an in-kind gift. The goal is to convert those physical gifts (e.g. cars, clothes, timeshares, etc.) to monetary donations. For many charities they aren’t equipped to handle the acquisition and subsequent disposition of the gift.
  2. The donor organization might be at conflict with the nonprofit’s mission and purpose.

Importance of gift acceptance policies

In today’s world, most charities have a gift acceptance policy that states that the organization reserves the right to refuse donations from any corporate entity. The challenge is not with individual cash donations but rather corporate monetary donations.

In the case of a matching gift program, the nonprofit will accept the individual employee’s donation but may not accept the corporate match if it is from a company that the nonprofit deems ineligible. The employee donor must understand this prior to making a gift and requesting the match. Companies need to understand that nonprofits have gift acceptance policies and make sure they communicate these policies to employees. 

Doctors Without Borders/Médecins Sans Frontières (MSF) recognizes the potential conflict between receiving donations from certain types of corporations and fulfilling their humanitarian programs. They have a strong gift acceptance policy which states that MSF will not “accept contributions from companies and their respective corporate foundations whose core activities may be in direct conflict with the goals of the medical humanitarian work of MSF or which may limit MSF’s ability to provide humanitarian assistance in any way.”

MSF is not alone. Most nonprofits have similar policies which protect them from accepting donations that are in conflict with their mission and values. Nonprofits would do well to make sure companies understand these policies. The IRS considers gift acceptance policies as a “best practice”; they ask whether a nonprofit has a “gift acceptance policy” when they file documents.

Recognition, acceptance, and communication

Corporations need to respect these policies. They also need to ensure their employees who might want to contribute through a matching gift program understand that they are free to donate, but the corporate match might not be accepted.

Corporations and nonprofit organizations can create strong and powerful partnerships when they work together. However, a particular corporate group is not a strong partner for every nonprofit. Recognition and acceptance by both parties is essential. We’re impressed with the good that is being done through strong corporate nonprofit partnerships. When it’s a match, they are powerful for creating and bringing about change in the world.

We give a big shout out to the nonprofits and corporations that are working together to further their mutual objectives. Keep up the good work.