An important note on this template
This resource includes helpful information on why a gift agreement can be necessary and important, and how to get started with one. The section below titled “*Gift Agreement Template” includes a templated gift agreement modeled from one created by Community Foundation of Collier County.
It is up to your organization to take this template and customize it to your own needs and purposes. The resources provided on this page should help you get started with making the template your own.
Resources used in this template
- Philanthropy Works – Gift Agreement
- Philanthropy Works – Leadership Gift Agreements
- Community Foundation of Collier County
- ConservationTools.org, administered by the Pennsylvania Land Trust Association
- Lynne Wester, Donor Relations Guru
- Adam Scott Goldberg, Florida Bar Journal
- George E. Constantine Cynthia (Cindy) M. Lewin Yosef Ziffer Andrew L. Steinberg, Venable LLP
What is a gift agreement and why do you need it?
“A donation [or gift] agreement may be used to ensure that a donor’s promise can be relied upon, set the expectations of both donor and donee, and prevent misunderstandings.”
– ConservationTools.org, Pennsylvania Land Trust Association
A gift or donation agreement, not to be confused with a gift acceptance policy, are expressly for the purpose of spelling out and documenting what the donor expects and what the nonprofit is committed to providing. Any gift that reaches the major gift status defined by your organization should require a gift agreement, even at the monthly gift level. A thorough gift agreement can ensure that your nonprofit and the donor are on the same page and agree with the various aspects of the major gift. Gift agreements are completed and signed to prevent misunderstandings, and show your donor that you care and that they are valued and important.
As a nonprofit organization must keep accurate records on donations received, so must a donor keep records of donations they’ve made — especially when it comes to tax time. Having an accurate gift agreement and other financial records on file will help keep the nonprofit and the donor on the same page.
Goals of your written gift agreement
The goals of your written agreement would likely address the following:
- Provide documentation of donor’s promise to make a future donation
- Set expectations and understanding between the donor and your organization to create a satisfactory experience
- Clearly set forth the donor’s intention
- Include specific, realistic, or measurable guidelines or restrictions on the nonprofit’s use of the gift
- Include clarity on when and why the nonprofit might alter how the funds should be used
According to the Pennsylvania Land Trust Association, a written agreement is needed for:
- a donation subject to restrictions that allow the donor control over the future use of the donation
- a donation to be held, invested, or disbursed pursuant to certain agreed-upon terms
- a donation that will result in naming a property or project after the donor
Some other questions and points from Philanthropy Works to consider when drafting your formal, written agreement:
- Can the nonprofit manage the gift within the proposed restrictions in a cost-effective manner consistent with the mission of the nonprofit?
- Is the nonprofit willing to accept the asset which is being proposed to fund the gift?
- How will the nonprofit account for the gift?
- What reports will be provided to the donor or the donor’s family/designates about the organization’s use of the gift?
- What recognition of the gift should be given to the donor?
- Are there expectations (do not agree to restrictions) on the nonprofit’s investment of the donated property?
- After the donor is no longer involved, who may later modify the donor’s restrictions?
- This might be on the extreme end, but you could include a clause identifying who, if anyone, has standing to bring suit.
- “Sunset” clauses are highly recommended for consideration (set an end date for the fund).
Sample Gift Agreement
Check out a sample gift agreement example for The University of Alabama at Birmingham provided by the Association of Donor Relations Professionals here.
Here’s a sample gift agreement for real estate property created by Tulsa County.
*Gift Agreement Template
This customizable template was created by the Community Foundation of Collier County and slightly modified. Make sure to customize section two in the template depending on the purpose of your gift agreement. Other areas that require customization are within brackets.
[Your organization’s logo]
[Your Organization] and Donor’s Name
This Gift Agreement (“Agreement”) is made this ____ day of _______ between [Donor’s Names] and their assignee (hereinafter referred to as “the Donor”), and [Your Organization] an [arts nonprofit organization located in Indianapolis, Indiana]. The Donor and [Your Organization] agree as follows:
- Donor Commitment. The Donor hereby pledges to [Your Organization] the sum of [insert amount] or more, which as provided for herein is designated for the benefit of [Fund Name] Endowment.
- Donor Purpose.
- Purpose. It is understood and agreed that the gift will be used for the following purpose or purposes: To establish an endowment from which the annual interest earnings will be used to [state purpose].
- Payment. It is further understood and agreed that the gift will be paid in full on or before [insert date]. Pledge payments will be made as follows:
It is also understood and agreed that the gift funds as received may be invested by a third-party that shall best determine investment options for this endowment fund (see item #4 below). The spending policy for the endowment will be the policy set forth and approved by [Your Organization] Board of Directors which will likely include the use of annual interest earnings only and not invade the principal of the fund to protect and perpetuate growth.
- Endowment. The gift specified above shall be used for the purpose of creating an endowment fund to be known as the [Fund Name] (“Fund”). The assets of the Fund may be merged or pooled for investment and investment management purposes with the general endowment or other assets of [Your Organization] and managed and invested in accordance with [Your Organization] policy and procedure, but shall be entered on the books and records of [Your Organization] as the [Name of Fund]. Distributions in support of the above gift purpose and reasonable fees associated with securing, raising, investing, and administering such funds shall be charged to the said Fund administered in accordance with the policies and procedures of [Your Organization] then in effect.
- Intent. It is the agreement of the parties and the intention of the Donor that this gift and any unpaid promised installment under this Agreement shall constitute the Donor’s binding obligation and shall be enforceable at law and equity, including, without limitation, against the Donor and the Donor’s estate, heirs and personal representatives, and their successors and assignees. The Donor acknowledges that [Your Organization] has substantially relied, and shall continue to rely, on the Donor’s gift being fully satisfied as set forth herein. The Donor acknowledges that [Your Organization] has committed substantial resources toward the match.
- Recognition by [Your Organization]. To honor the Donor, and to express the appreciation of [Your Organization], publicity in the form of news announcements, both internal and external, will be made in the annual report with the permission of the Donor.
- Reporting and Stewardship. Reports on performance of the Fund and use of the proceeds shall be provided annually to the Donor for endowment gifts.
- Additional Gifts. The Donor reserves the right to increase the Fund through additional gifts and hereby consents to additional contributions to the Fund by any individual, corporation, foundation, trust, estate or other legal entity through individual gift, bequest or other gift vehicle, and all gifts so designated shall be subject to the provisions of this Agreement.
- Future Changed Circumstances. If, in the opinion of the Board of Trustees of [Your Organization], all or part of this gift cannot at some time in the future be usefully or practically applied to the above purposes or if the purpose cannot be achieved because of a future change in law or unforeseeable circumstances, it may be used for any related purpose which in the opinion of the Board of Trustees will most nearly accomplish the Donor’s wishes.
- Amendment. By mutual consent of [Your Organization] and the Donor, the Donor’s legally or duly appointed agent or attorney-in-fact, or the personal representative of the Donor’s estate, any provision of this Agreement may be amended, modified, or deleted. Any such changes, deletions or additions shall be recorded in written signed addenda, which shall form part of this Agreement.
- Morality Clause. If at any time the donor or his or her name may compromise the public trust or the reputation of the institution, including acts of moral turpitude, the institution with the approval of the board of trustees has the right to remove the name or return the gift.
- Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter of the Agreement and is subject to the laws of the State of [Your State]. This Agreement also supersedes all other agreements and understandings, both oral and written, between the parties relating to the subject matter of the Agreement.
In witness whereof, the parties to this Agreement have affixed their signatures:
THE BOARD OF DIRECTORS OF [Your Organization]
[Donor’s Name] Date [President’s Name] Date Donor President and Chief Executive Officer
[Donor’s Name] Date [Nonprofit CEO’s name] Date Donor Chairman, Board of Directors
XXXXXXX Date XXXXXXXX Date Witness Witness
What is a morality clause and why should you include one? What does it look like in your gift agreement?
A morality clause or morals clause is a small, but important segment to add to your gift agreements. A morality clause is used to define particular circumstances that would be embarrassing or harmful to an organization’s reputation and values. According to Lynne Wester, nonprofits must protect their organizations from undue risk. Most nonprofits depend on public goodwill to attract donors. Close association with someone whose name has been badly tarnished can taint the nonprofit’s reputation and harm its ability to attract support.
Here is some sample language from Lynne Wester at Donor Relations Guru for you to have reviewed by your general counsel and then have in place in your gift agreement:
If at any time the donor or his or her name may compromise the public trust or the reputation of the institution, including acts of moral turpitude, the institution with the approval of the board of trustees has the right to remove the name or return the gift.
*This was also included in section 11 of the gift agreement template above.
Here’s another sample morality clause from Adam Scott Goldberg at the Florida Bar Journal:
If at any time the donor fails to conduct himself or herself without due regard to public morals and decency, or if the donor commits any act or becomes involved in any situation, or occurrence tending to degrade the donor in the community, or which brings the donor into public contempt or scandal, or which materially and adversely affects the reputation or business of the charity, whether or not information in regard thereto becomes public, the charity shall have the right to remove donor’s recognition rights as required pursuant to this gift agreement.
Other resources to help you get started creating a gift agreement
ConservationTools.org administered by the Pennsylvania Land Trust Association was very thorough in creating a helpful donation agreement guide from a conservation organization perspective. You can check it out here.
Philanthropy Works published a piece on getting started with a gift agreement geared towards a department leadership perspective. Read it here.
AICPA.org’s piece, here, dives into considerations in negotiating and drafting gift agreements.