FundSvcs Community

I'm so glad for these conversations and the resources available with this listserv!

Based on John's response, I'm concluding that our Gift Acceptance Policy should specify that only whole life (not term) insurance policies can be accepted (that's a clarification we didn't previously state in our GAP).  Is that correct?

Also, one of our team members recently came back from a conference under the impression that if the donor of the donated life insurance policy, makes premium payments directly to the life insurance company for the policy, that we can/should record that premium payment as a gift in kind (ie they paid a bill on our behalf that we would otherwise have had to pay).  We haven't done this in the past, and were operating under the assumption that only when the donor made a cash gift to us (in the amount of the premium), was there a charitable gift to record.

Gwen

You can "accept" anything you want!  Well, within reason.

However, term policies offer no tax advantage to the donor.  And there isn't a legal gift with these - no cash surrender value and premium payments are not deductible.  The only value they have to a nonprofit organization is if the donor dies during the "term" and you realize the proceeds.

As to what your colleague heard, that applies only to whole-life policies that you own and are the beneficiary.  In that case, the donor can make payments directly to the insurance company for your premium payments.  The company acts as your agent.  However, you must obtain proof from the company regarding who made the actual payment.  You will need a copy of the canceled check or credit card statement.  Your receipt must reflect that entity's name.

Frankly, it is much cleaner if the individual makes a gift to you rather than pay the company.

John