In order to protect the interests of the Omicron Delta Kappa Society and Educational Foundation, Inc. (the “Society”) and the members of the Society and other entities who support its programs, these policies are designed to assure that all gifts to, or for the use of, the Society are structured to provide maximum benefits to all involved.
This document will focus on both current and deferred gifts, with special emphasis on various types of deferred gifts.
The goal is to encourage funding of the Society without encumbering the organization with gifts which may prove to generate more cost than benefit, or which are restricted in a manner which is not in keeping with the goals of the Society.
To optimize funding from individuals and other entities, the Society must be capable of responding quickly, and in the affirmative where possible, to all gifts offered by prospective donors. It is understood that except where stated otherwise, these policies are intended as guidelines, and that flexibility must be maintained since some gift situations can be complex, and decisions only made after careful consideration of a number of interrelated factors. Therefore, these policies will in some instances require that the merits of a particular gift be considered by Board of Trustees (the “Board”) and a final decision be made only by that body.
These gift acceptance policies shall be reviewed by the Board as circumstances may warrant.
Categories of Giving
I. Annual Giving (Unrestricted) – These are gifts that are used for ongoing current budgetary expenditures including un-endowed or general scholarships. These gifts are not restricted by the donors as to their use.
II. Special Projects (Restricted) – These are gifts that are expendable for specific approved purposes. The donor designates the use of his/her gift for special purposes.
To assure continuity and integrity of the gift, all restricted gift documents should contain language similar to:
“Should the purpose(s) of the gift, as detailed herein, no longer exist(s), the Board of Trustees are authorized to use the earnings of the gift, as they shall determine, in order to best carry out the intended purposes stated in the agreement or the mission of the Society.”
III. Endowment – Endowment gifts are considered perpetual. It is a special or reserve fund that stipulates or restricts the use of the income from the endowed fund. From the Society’s point of view, the terms of the endowment should be written with wide flexibility, yet ensuring the donor is comfortable and satisfied with the terms of the agreement.
A. Types of Endowments
- Pure Endowments: These are endowments which are to continue in perpetuity and in which the principal is not to be invaded.
- Quasi-endowments: The principal of these endowments can be used upon the approval of the Board. Typically, these funds are board-designated endowed funds.
- Term Endowments: These funds are usually set up for a specific period of time. It is usually understood that the principal will be withdrawn from the investment pools after the stated period of time (for example, a period of 3-10 years).
- Preservation and Maintenance Endowment: These funds are to be specifically used to support the long-term preservation, care and maintenance for the National Headquarters Building (located at 224 McLaughlin Street, Lexington, VA 24450).
B. Endowment Restrictions
No restrictions on how gifts may be used will be honored without proper approval from the Board.
C. Minimum Amounts
The minimum required and time allowed to establish endowed funds:
- Named Scholarship – $25,000
- Circle Programming Fund – $10,000
Because conditions change over time, it is recommended that endowment funds contain the following contingency clause:
“If circumstances should arise in the future that make it illegal, impossible, or impracticable to use the gift for the purposes specified above, then the Board shall use its best judgment to determine prudent use of the fund in an attempt to fulfill the primary purpose of the fund or Society.”
The maximum period to raise an endowed fund may not exceed five years.
Methods of Giving
There are a number of ways that assets may be used to provide gifts to the Society. This variety allows donors to choose the most appropriate for their circumstances and interests.
I. Outright Gifts
l . Gifts in the form of cash, checks or by credit or debit card including online donations shall be accepted regardless of the amount unless, as in the case of all gifts, there is a question as to whether the donor has sufficient title to the assets or is mentally competent to legally transfer the funds as a gift to the Society.
2. All checks must be made payable to Omicron Delta Kappa Society and Educational Foundation, Inc. in U.S. Dollars and shall in no event be made payable to an employee of the Society, agent, or volunteer for the credit of the Society.
B. Publicly Traded Securities
Securities that are traded on the New York, NASDAQ, American Stock Exchanges, or other readily marketable securities, shall be accepted by the Society. It is policy that such securities will be immediately sold by the Society. In no event shall an employee or volunteer working on behalf of the Society commit to a donor that a particular security will be held by the Society unless authorized to do so by an officer (Chair, National Treasurer, President/CEO) of the Society. The value of the gift will be the average of the highest and lowest selling prices quoted for the security on the day of the gift.
C. Closely Held Securities
These are shares of securities in entities which have been organized for profit making purposes and are rarely traded on stock exchanges. The value of held securities in excess of $10,000 will be determined by a qualified appraiser as required by the Internal Revenue Service. Gifts of $10,000 or less may be valued at the per share base purchase price of the most recent transaction. Typically, this transaction will be the redemption of the stock by the corporation.
Method of Delivery of Securities
Mailing: If securities are mailed, donors should obtain stock power, signing it exactly as it appears on the stock certificates. The stock power and letter with instructions should be mailed in a separate letter from the stock certificates (i.e., stock power with certificates become bearer instruments and should not be mailed together). If possible, the stock certificates should be sent via registered mail. The value of the transaction will be determined based on the postmarked date.
Electronic Transfer: If the donors are interested in transferring securities electronically from their brokerage house to the Society’s account, they should consult the National Headquarters for DCT instructions. The value of the transaction will be determined on the date of transfer to the Society’s brokerage account.
D. Non-Traditional Investments
The Society may accept gifts of non-traditional investments such as partnership interests, after a thorough review of the following:
- Nature of any applicable restrictions
- Legal and other liabilities associated with the asset
- Carrying costs such as administrative and legal fees
- Exposure to unrelated business income tax liability
E. Real Property
No gift of real estate shall be accepted without prior approval of the Board.
1. Factors to be considered during this review include:
- The usefulness of the property for Omicron Delta Kappa
- The marketability of the property
- The existence of restrictions, reservations, easements, and/or other limitations
- The existence of encumbrances, such as mortgages and liens
- Carrying costs, such as property owners’ associations dues, taxes, insurance and other required maintenance expenses
- Fair market value in relation to the costs and limits listed above as determined by a qualified appraisal conducted in accordance with Internal Revenue
- Environmental factors including an inquiry of the present owner regarding his or her knowledge of the history of the property, a title search to determine prior owners, visual inspection of the property for any evidence of environment hazards – commercial property will require a phase I environment assessment prior to acceptance
2. A gift of real estate shall not be accepted without being appraised by a party who has no business or other relationship to the donor or the Society.
3. No commercial real estate shall be accepted by anyone on behalf of the Society without prior approval from the Board.
4. Real estate shall not be accepted to fund a charitable gift annuity without seeking an opinion as to the permissibility of this action under the laws of the state or states involved and approval by the Board.
5. Special attention shall be given to the receipt of real estate encumbered by a mortgage, as the ownership of such property may give rise to unrelated business income for the Society, and disqualification of certain split interest gifts unless handled in a proper manner.
6. On rare occasion, the Society may agree to a bargain sale by purchasing adonor’s property for a price less than fair market value, pending approval of the Board.
F. Tangible Personal Property
1. Jewelry, artwork, collections, and other personal property (except books, manuscripts, or documents written by a member of Omicron Delta Kappa) shall not be accepted unless the employee, agent, or volunteer working on behalf of the Society shall have reason to believe the property has a value in excess of $250. Such property can only be accepted by the Board or such other person or persons authorized to do so by the Board.
2. No personal property (except as noted above) shall be accepted by the Society unless there is reason to believe the property can be quickly converted to cash or other value. Prospective donors should be advised that the Society reserves the right to sell or otherwise dispose of the personal property in question, if such action is financially advisable or necessary. No personal property shall be accepted that obligates the Society to ownership of it in perpetuity. No perishable property or property which will require special facilities or security to properly safeguard will be accepted without prior approval of the Development Committee of the Board.
3. For in-kind donations of personal property with a fair market value of less than $5,000, the Society must be furnished with the following information:
- Donor’s name, address, and telephone number
- Contact person if different from above
- Brief physical description of the donated asset, including an explanation from the donor as to the method used to determine the fair market value
- date the Society acquired the asset and its intended use
4. For in-kind donations of personal property with a fair market value exceeding $5,000, the organization must be furnished with, in addition to the above, an independent evaluation from a qualified appraiser and meet reporting requirement s for IRS Form 8283, “Non-cash Charitable Contributions Appraisal Summary.”
5. Only the Board or persons authorized by the Development Committee to do so may represent to a donor that property will or will not be held by the Society for a specific period of time or for purposes related to its tax-exempt status. Donors should be notified at the time of the gift that the Society will, as a matter of corporate policy, cooperate fully in all matters related to IRS investigations of non-cash charitable gifts.
G. Other Property
1. Other property of any description including mortgages, notes, copyrights, royalties, easements, whether real or personal, shall only be accepted by action of the Board or persons duly acting on its behalf.
2. Appropriate inquiry shall be made and special consideration shall be given to the nature of any gift property and whether it is in keeping with the mission of the Society prior to the acceptance of any property by the Society.
II. Deferred Gifts
The term deferred gifts or planned gifts primarily refers to a) bequests, whereby the donor used the asset during his/her lifetime, and the charity receives the asset at the donor’s death and b) life income gifts, whereby a donor makes a gift today and receives a stream of income for life, and upon the donor’s death the nonprofit has the use of the remainder value of the gift.
1. Gift through wills (bequests) shall be actively encouraged by the Society.
2. Gifts from the estates of deceased donors consisting of property which is not acceptable shall be rejected only by action of the Board. The National Counsel shall expeditiously communicate the decision of the Development Committee to the legal representatives of the estate. If there is any indication that the representatives of the estate or any family member of the deceased is dissatisfied with the decision of the Development Committee, this fact shall be communicated to the Board and to the Chair quickly as possible.
3. Attempts shall be made to discover bequest expectancies wherever possible in order to reveal situations which might lead to unpleasant donor relations in the future. Donors are encouraged to recognize that over the many years following the establishment of a deferred gift, the needs, policies and circumstances of the Society can change. The Society must have the flexibility to make use of the funds in the best interest of the Society and in accord with donor specifications. Where possible, intended bequests of property other than cash or marketable securities should be brought to the attention of the Board and every attempt be made to encourage the donor involved to conform his or her plans to the Society’s policy on limitations and restrictions.
B. Charitable Remainder Trusts
Charitable remainder trusts are irrevocable arrangements that pay income to the donor and/or other beneficiaries for life or a term of years. Assets which are readily acceptable for charitable remainder trusts include cash, marketable securities, and real estate not subject to mortgages or liens. Charitable remainder trusts may include Charitable Remainder Unitrust and Charitable Remainder Annuity Trust.
1. The minimum initial contribution for a Charitable Remainder Trust, of either type, shall be $100,000.
2. Assets such as stock, bonds, and real estate, may be used to create (fund) a Charitable Remainder Unitrust or a Charitable Remainder Annuity Trust
3. Charitable remainder trusts and all other deferred gifts shall be encouraged as a method of making gifts to the Society while retaining income which may be needed by the donor or other persons chosen by the donor for any number of personal purposes.
4. No representations shall be made by any employee or other persons acting on behalf of the Society as to the manner in which charitable remainder trust assets will be managed or invested by a corporate fiduciary that may be identified by the Society with the prior approval of such representation by the fiduciary.
C. Charitable Lead Trusts
A charitable lead trust is an irrevocable trust designed to provide financial support to one or more charities for a period of time, with the remaining assets eventually going to family members or other beneficiaries. Assets which are readily acceptable for charitable lead trusts include cash, marketable securities, and real estate not subject to mortgages or liens.
1. The minimum initial contribution for a Charitable Lead Trust shall be$250,000.
2. Charitable lead trusts and all other deferred gifts shall be encouraged as a method of making gifts to the Society while retaining income which may be needed by the donor or other persons chosen by the donor for any number of personal purposes.
3. No representations shall be made by any employee or other persons acting on behalf of the Society as to the manner in which charitable remainder trust assets will be managed or invested by a corporate fiduciary that may be identified by the Society with the prior approval of such representation by the fiduciary
D. Qualified Retirement Plans – Qualified retirement plans such as 401(k)’s, 403(b)’s, qualified pension plans, profit sharing plans, and Keogh plans are often ideal planned gifts. There are three basic methods of transferring retirement assets to the Society:
1. Outright Gifts – donors may choose to withdraw the assets from the plan and make a gift to the Society. These assets are fully taxable to the donor as ordinary income; however, the donor will receive a charitable deduction to the extent the donation does not exceed 50% of their adjustable gross income. Early withdrawal penalties are imposed for donors under the age of 59 1/2.
2. Designation of a Beneficiary – A donor can designate the Society as a beneficiary to receive all or a percentage of the retirement account upon the donor’s death. The donor receives an estate tax deduction, and the income is not taxed due to the tax exempt status of the Society.
3. Transfer to a Charitable Remainder Trust – The guidelines for this type of gift are similar to transferring other assets to a Charitable Remainder as noted in part 1, early withdrawal penalties may be imposed if a donor transfers the assets prior to age 59 1/2.
E. Charitable Gift Annuities – The gift annuity is an arrangement, whereby the donor (and a surviving beneficiary, if desired)receives a fixed annual income for at the end of the term the Society retains the residual.
1. The minimum initial contribution for a Gift Annuity shall be $20,000.
2. The minimum contribution for an additional Gift Annuity by an individual who has previously entered into a Gift Annuity agreement shall be $20,000.
3. The Society partners with the National Gift Annuity Foundation to administer the CGAs created to benefit O∆K.
F. Life Estate Gifts – Life estate gifts are unique from other planned gifts for the following reasons:
- The item contributed is a donor’s home, vacation home, or farm including residence.
- The donor relinquishes full or part ownership to the Society for the right to enjoy use of the property for as long as they wish. For this exchange, a donor receives an income tax deduction. Donors are responsible for maintenance, taxes, and insurance as long as they occupy the residence, unless there is an agreement otherwise between the donor and the Society.
- The asset produces no income for the Society, and thus no income can be paid to the donor by the Society.
1. Donors shall generally not be encouraged to make gifts of real property to the Society under which they maintain a life interest in the property.
2. This policy is based on the fact that such transfers are often not in the best interest of the donor involved, and there is potential for negative publicity for the Society should a donor have a need to sell the property to generate funds, only to find that a relatively small portion of the proceeds would be available to the donor as owner of the life estate.
3. Such gifts may be accepted by approval of the Board in situations where the asset involved appears to be a minor portion of the donor’s wealth, and the Development Committee is satisfied that there has been full disclosure to the donor of the possible future ramifications of the transaction.
G. Gifts of Life Insurance
A donor may assign to the Society the benefits of a newly purchased life insurance policy. A donor may also assign to the Society an existing life insurance policy that is no longer needed, making the Society both the policy owner and the beneficiary. Premium payments, for which the Society is both the owner and beneficiary, are tax deductible for the donor.
Typically, the Society acts as a pass through agent whereby the donor makes payments to the Society for the amount of premium, and the Society makes the premium payments to the insurance company.
1. The Society will encourage donors to name the Society to receive all or a portion of the benefits of life insurance policies which they have purchased on their lives.
2. The Society will not, however, as a matter of course agree to accept gifts from donors for the purpose of purchasing life insurance on the donor’s family. Exceptions to this policy will be made only after researching relevant state laws to assure that the Society has an insurable interest under applicable state law. No insurance products may be endorsed for use in funding gifts to the Society without Board approval.
3. In no event shall lists of the Society donors be furnished to anyone for the purpose of marketing life insurance for the benefit of donors and/or the Society. This policy is based on the fact that this practice represents a potential conflict of interest, may cause donor relations problems, and may subject the Society to state insurance regulations should the activity be construed as involvement in the marketing of life insurance.
4. If the donor does not choose to continue paying the premiums, the Society may elect to: continue paying the premiums and receive the full face value of the policy at the donor’s death OR surrender the policy for its present cash value.
5. It is recommended to encourage the donor to make accelerated payments to build up the cash surrender value allowing premium payments to be fulfilled in a period of five to seven years.
H. Corporate Matching Gifts – All matching gifts received by the Society as a result of an employee’s contribution will be directed to the same fund as the donor’s gift.
I. IRA Rollover Gifts – A charitable IRA rollover is a gift option that enables donors age 70 1/2 or older to transfer up to $100,000 directly from the donor’s IRA (or IRAs) to a qualified charity each year. The donor does not recognize the transfer as taxable income on his or her tax return. This law no longer has an expiration date so individuals are free to make annual gifts to the organization this year and well into the future.
III. Payment of Fees Related to Gifts
A. Finder’s Fees or Commissions
1. In general, the Society will pay no fee to any person as consideration for directing a gift to the Society. It is understood that such fees may or may not be legal and that in the case of irrevocable deferred gifts which involve management of assets, the payment of such fee may subject the Society and its management and Trustees to federal and state security regulation.
2. In no event whatsoever will a commission or finder’s fee of any type be paid to any party in connection with the completion of a gift to the Society without prior written approval of the Board and legal counsel and subsequent written notification to the donor involved of the amount and recipients of any such fee.
B. Professional Fees
1. The Society may pay reasonable fees for professional services rendered in connection with the completion of a gift to the Society. Such fees will be paid only with prior approval of the Board.
2. Fees shall be reasonable, and directly related to the completion of a gift. They shall be limited to appraisal fees by persons who are competent and qualified to appraise the property involved and who have no conflict of interest, legal fees for the preparation of documents, accounting fees incident to the transaction, and fees of “fee for service” financial planners. In the case of financial planners, such persons must aver in writing that they are not compensated for the sale of products to clients. This distinction is vital in avoiding the payment of commissions which could be construed as triggering securities regulation.
3. In the case of legal, accounting, and other professional fees, an attempt shall be made by the Development Committee to ascertain the reasonableness of these fees prior to the acceptance of a gift. An hourly breakdown of time should be requested. In cases which appear excessive, the summary of fees shall be submitted to the National Counsel for review and approval prior to payment.
4. In cases where the persons receiving fees were initially employed by the donor and the Society is asked to pay the fees involved, the donor shall be notified that the payment of such fees may result in taxable income to the donor in the amount of the fees paid.
5. In situations where advisors retained by the Society prepare documents or render advice in any form to the Society and/or a donor to the Society, it shall be disclosed to the donor that the professional involved is in the employ of the Society and is not acting on behalf of the donor and that any documents or other advice rendered in the course of the relationship between the Society and the donor should be reviewed by counsel for the donor prior to completion of the gift.
IV. Restrictions on Use and Investment of Gifts
No restrictions on how gifts may be used by the Society will be honored without prior approval of the Board, their assignee in the case of current gifts, or subsequent approval by the Board in the case of gifts received by will or other gift which is effective at death which has not been previously approved by the Board.
Approved by the Omicron Delta Kappa Foundation Board of Trustees on January 18, 2015.
Affirmed by the Omicron Delta Kappa Society and Educational Foundation Board of Trustees on June 30, 2019.