HHE encourages gifts through the generosity of donors to further the work of HHE as well as to meet the needs of donors. HHE shall strive to provide appropriate information to donors and their advisors and shall seek to meet the needs of donors without pressure or undue influence, maintaining the highest ethical standards in all transactions.

HHE shall not give legal or financial advice to anyone and shall strongly encourage prospective donors to seek their own professional counsel. When communicating with prospective donors, HHE may provide information regarding the benefits and limitations with respect to making a gift. HHE shall exercise caution in encouraging prospective donors to take action and in providing prospective donors with income projections for specific planned giving vehicles such as charitable remainder trusts. In encouraging and assisting donors with planned gifts, HHE shall follow the Model Standards for the Charitable Gift Planner approved by the National Committee on Planned Giving found in Exhibit C of these Guidelines.

HHE shall hold in strict confidence all information regarding donors and prospective donors. Information regarding the donor’s identity, amount, and description of the gift, and special conditions governing the use of the gift shall not be made public if a donor so requests.

HHE may provide prospective donors with a copy of these policies and procedures, including the exhibits, for consideration of the donor and the donor’s advisors. Exhibit A to these policies and procedures sets forth a chart describing the relative tax deduction for donations of certain types of property to a publicly supported charity. This Exhibit reflects the law as of the date of the adoption of these policies and procedures and, unless indicated on the Exhibit, has not been updated. It is the responsibility of the donor to determine the donor’s tax consequences related to the donation.

II. Decision-Making Process

The Charitable Funds Manager (CFM) of HHE shall be responsible for ensuring that all gifts received are accepted in accordance with these policies and procedures. Outside advisors shall be used when appropriate. The CFM may accept gifts of cash and marketable securities. Gifts of all other assets shall be reviewed and accepted upon approval of the Board of Trustees.

III. Fees and Documents

HHE will not pay or reimburse fees generated by a donor’s legal counsel. HHE will not prepare documents relative to a donor’s estate plan. HHE shall not pay finder’s fees relating to charitable gifts. HHE will typically not pay for the costs associated with implementing a donor’s gift, other than fees to advisors retained by HHE. Donors will pay for their own appraisals. HHE may pay for its own due diligence costs, including the cost of title reports and environmental studies related to real estate gifts.

IV. Acceptable Asset Types

HHE is authorized to accept the following assets:

1. Cash or cash equivalents: Acceptable.

2. Publicly traded securities: Acceptable. HHE shall promptly sell any contributed securities, unless holding the securities is deemed appropriate by HHE’s investment advisors. HHE shall determine, prior to accepting these securities, whether the securities, in the hands of HHE, are in any way restricted as to sale. If there are any legal restrictions on sale, HHE will consult with appropriate legal counsel before accepting the gift.

3. Closely held securities and other intangibles: Acceptable, subject to review by appropriate legal counsel. HHE will generally not accept securities and other intangible assets which may not be sold, have no value, or may result in additional liability to HHE. HHE shall not offer to value the contributed property.

4. Tangible personal property: Acceptable, subject to review by appropriate counsel if necessary. HHE shall not offer to value the contributed property. The donor shall sign a statement of ownership and disclose any liens on the property. HHE will not accept any property subject to a restriction on HHE’s ability to use, sell, or otherwise deal with the property as it deems necessary. HHE will generally not accept automobiles or other vehicles, although exceptional situations will be considered.

5. Life insurance: HHE may accept the gift of an ownership interest in a life insurance policy. If the policy is not fully paid-up, the donor shall be encouraged to make annual gifts to HHE sufficient to cover additional premiums. HHE shall have the right to retain the life insurance policy, cash it in, or otherwise make use of its value.

6. Real estate: Acceptable, but not directly. Real estate can be given via one of two options (subject to review by appropriate legal, real estate, and other necessary counsel):

   a. “Contract for donation.” This is a set of legal documents to donate the proceeds of the sale of a property to HHE. When the property is sold, two escrow statements are prepared. In the first escrow the donor gives the property to the charity. In the second escrow, the charity sells the property to the new owner. The charity only owns the property for a few minutes until the second escrow document is signed.

   b. A third party that accepts the property donation, sells it, then donates the proceeds to HHE. One example is Profits for Nonprofits

7. Restricted gifts: HHE will honor whenever possible the intentions of donors who wish their gift used for a specific purpose that is consistent with HHE’s mission. HHE, however, will not accept permanently restricted gifts unless the restriction contains language which allows HHE to lift the restriction “if in the judgment of HHE’s board of trustees the restricted use of the gift becomes impossible or impractical to follow.” For gifts to endowment principal these restrictions are in the donor fund proposal.

V. Gift Vehicles

HHE will accept gifts through the following gift vehicles:

• Outright donations

• Testamentary bequests

• Charitable remainder trusts (HHE will not act as trustee, but will encourage donors to select a qualified trustee of their own choosing.)

• Pooled income fund

• Remainder interest in residences and farms (HHE will encourage donors to find a qualified charity willing to enter into charitable life estate agreements.)

HHE does not offer the following gift vehicles:

• Charitable gift annuities (HHE will assist donors who wish to have a gift annuity contract benefiting HHE to do so through a community foundation or other substantial organization with a license to issue charitable gift annuities in the state of residence of the donor.)

• Charitable lead trust (HHE will encourage donors to find and appoint qualified trustees to manage charitable lead trusts.)

VI.

What Does HHE Say to Donors ?

A.

The Substantiation Rule: IRC Section 170(f)(8)

In order to assist donors in claiming a proper charitable deduction on their income tax returns, HHE will provide receipts to donors, as described in this Section A. IRC Section 170(f)(8) denies an income tax charitable contribution deduction for a contribution of $250 or more unless the taxpayer obtains a contemporaneous written acknowledgment from the charity. Note that, legally, it is the donor’s responsibility to obtain the receipt.

The receipt must include:

• The amount of cash and the description (but not the value) of any property given;

• Whether HHE provided goods or services in consideration for the gift; and

• A description and good faith estimate of the value of any goods and services provided.

Contemporaneous means received on or before the earlier of the date the taxpayer files his/her tax return for the year, or the due date for the return, including extensions.

B. Return Benefits to Donors

HHE’s policy is not to provide any tangible benefits to donors in exchange for their contributions. HHE may change that policy by amending these policies and procedures, after consulting legal counsel.

C. HHE’s Sale of Donated Property

In the event that HHE sells, exchanges, or otherwise disposes of “charitable contribution property” within two years of receipt, it shall file a Form 8282 with the IRS, disclosing the disposition and amount received. Charitable contribution property means property for which an income tax deduction was claimed in excess of $5,000 (except publicly traded securities). HHE’s accounting entry for donated property: receipts for gifts in kind need a corresponding entry in the general ledger.

SECTION TWO: ISSUES AFFECTING DONOR DEDUCTIONS

This Section does not reflect HHE policies, but is designed to be a reference to HHE staff on the basic laws and regulations that govern charitable giving. Care should be taken to keep this information up to date. HHE staff may, from time to time, provide copies of this policy to a donor for use by the donor’s advisors. Therefore, it contains some legal citations to assist donor’s counsel. By providing this information to donors, HHE is NOT advising donors on the tax or other legal consequences of a donation to HHE. All donors reading this policy are urged to consult with their own tax and legal advisors.

I. Has the Donor Made a Deductible Gift?

The Supreme Court held that the test for determining whether a transfer was a gift or not was whether the transfer was made out of "detached and disinterested generosity;" i.e., a transfer for no consideration and without the expectation of return benefit. Duberstein v. Comm'r ., 363 US 278 (1960).

Regulation Section 1.170A-1(h) places a burden of proof on a donor who makes a gift and receives goods or services in return: In order to claim a deduction, the donor must show that his/her contribution exceeded the value of the goods or services received, and also that he/she intended to make the excess payment. Only the excess is deductible.

There are also special bargain sales rules where a donor contributes property that is subject to debt, and the charity assumes the debt. In these situations, the donor’s gift will be a part gift and part sale, with basis allocations described in the IRC and Regulations.

II.

When Is the Gift Complete ?

A.

Basic Tax Law

Regulation Section 1.170A-1(b): Regulation Section 1.170A-1(b) says a contribution is made at the time delivery of the gift asset is effected. The general application of this rule often involves the question: “When did the donor relinquish dominion and control over the gift asset?”

B. Applications of the Basic Rules

1. Gift by check or credit card

The unconditional delivery of a check which clears in “due course” is deemed to be given on date of delivery to HHE. A contribution made by credit card is deductible in the year in which the charge is made, regardless of when paid. Rev. Rul. 78-38, 1978-1 CB 67.

2. Gift of stock

A properly endorsed stock certificate (or stock certificate and signed stock power) donated to a charity (or its agent) is deemed given on date of delivery.

Alternative rule: The gift is complete when ownership of the stock is transferred on the corporation’s books and records. For shares held in street name, the gift is complete when ownership of the stock is changed on the broker’s records.

3. When is a check or stock certificate “delivered” the “mailbox” rule

A check (or stock certificate) that is mailed to HHE, and received in due course, is deemed to be delivered on date of mailing. It is not clear whether this longstanding “mailbox rule” applies to checks or certificates sent by Federal Express or other private carrier. When a donor puts a letter in a USPS mailbox, or when a letter is taken from a donor’s private mailbox by a postal worker, the donor can no longer take back the letter. The letter no longer belongs to the donor. On the other hand, when a donor sends a Federal Express envelope, Federal Express is the donor’s agent, and the donor can theoretically ask Federal Express not to deliver the package. In that case, the date of delivery is the date that the package is received by HHE.

4. Real property and tangible personal property

Delivery of tangible personal property usually requires an actual transfer of possession. In some cases, constructive delivery can be shown (TG Murphy, TC Memo 1991-276), for example, by delivery of a signed bill of sale. Gifts of real estate require the delivery of a formally executed and acknowledged (notarized) deed.

III.

What Does the Donor Need to Do ?

A.

The Recordkeeping and Appraisal Rules

Regulation Section 1.170A-13 contains a wealth of useful information. Note that these rules apply to all gifts, regardless of whether the substantiation rules of IRC Section 170(f)(8) apply.

B. The “Basic” Rules for Gifts of Cash and Property

For gifts of cash, the donor must maintain a canceled check, receipt, or other “reliable written records” evidencing each contribution (including name of charity, date, and amount). The burden of proof regarding the “reliability” of those records (i.e., whether the IRS will accept them) rests with the donor.

For gifts of property to which the appraisal rules (described below) do not apply, the donor must maintain a receipt from the charity showing the name of the charity, the date and location of the gift, and a description (but not value) of the property. If the deduction for a gift of property exceeds $500, the donor must maintain a written record including the above information plus manner and date of acquisition and cost basis, and the donor must complete and submit Form 8283 with the donor’s return.

Appraisal rules are discussed below. For a discussion of receipts that HHE should provide to the donor, see Section One, Part V, above.

IV. Appraisals

One of the requirements for gifts that include items other than cash, cash equivalents, or publicly traded stock with no restrictions as to transfer, is that these gifts, if worth more than $5,000, must be appraised. The following rules apply to appraisals, for which the donor is responsible.

A. Qualified Appraisal

To be a qualified appraisal, a document must:

1) Be made not earlier than 60 days prior to the date of the contribution, and be received by the donor no later than the due date (including extensions) of the return on which the deduction is claimed;

2) Be prepared, signed, and dated by a qualified appraiser; and

3) Not involve an appraisal fee that is based on the appraised value of the property.

A qualified appraisal must include the following information:

1) A description of the property that sufficiently identifies the property that was appraised as the property that was (or will be) contributed;

2) In the case of tangible property, the physical condition of the property;

3) The date (or expected date) of the contribution;

4) The terms of any agreement relating to the use, sale, or other disposition of the property contributed, including the terms of any agreement or understanding that restricts or earmarks donated property for a particular use;

5) The name, address, and identifying number of the qualified appraiser and of any entity or person who employs or engages the qualified appraiser;

6) The qualifications of the qualified appraiser who signs the appraisal, including the appraiser's background, experience, education, and membership, if any, in professional appraisal associations;

7) A statement that the appraisal was prepared for income tax purposes;

8) The date on which the property was appraised;

9) The appraised fair market value on the date of contribution;

10) The method of valuation used to determine the fair market value, such as the income approach, the market-data approach, and the replacement-costless-depreciation approach; and

11) The specific basis for the valuation, such as specific comparable sales transactions or statistical sampling, including a justification for using sampling and an explanation of the sampling procedure employed.

B. Qualified Appraiser

A qualified appraiser is an individual who meets the following criteria:

a ) Holds himself or herself out to the public as an appraiser or performs appraisals on a regular basis;

b) Is qualified to make appraisals of the type of property being valued, according to qualifications described in the appraisal;

c) Understands that an intentional overstatement of the value of the property described in the appraisal may subject the appraiser to civil penalty for aiding and abetting an understatement of tax liability;

d) Is not the donor, donee, or any party to the transaction in which the donor acquired the property;

e) Is not any person employed by or related to one of the above parties; and

f) Is not someone primarily used by one of the above parties who does not perform a majority of his or her appraisals for other persons.

C. Appraisal Summary

In addition to obtaining a qualified appraisal, the donor must attach an “appraisal summary,” which must be signed by both the appraiser and the donee, to his/her income tax return for the year in which the deduction is claimed. The IRS has provided Form 8283 for this purpose.

V. Sample Form

The following is an all-purpose receipt where no return benefits are provided to donor.

This letter is to gratefully acknowledge, for your tax records, our receipt of your generous gift of [cash in the amount of $_______] [describe property donated in reasonable detail]. We received your gift on [date] at [location].

No goods or services were provided to you in exchange for this gift. Therefore, the full amount of your contribution is deductible.

Again, we thank you for your support.

EXHIBIT A LIMITATIONS ON CHARITABLE CONTRIBUTIONS INCOME TAX DEDUCTIONS

FORM OF GIFT	Amount of Deduction for Gifts to HHE § 170(e)1	Limitation on Gifts to HHE § 170(b)2
Cash	Face Value	50%
Intangible Property (e.g., securities)
Long-term capital gains	FMV3	30%3
Short-term capital gains	BASIS4	50%
Qualified Appreciated Stock	N/A	N/A
Real Estate
Long-term capital gain	FMV3	30%3
Short-term capital gain	BASIS4	50%
Tangible Personal Property
Unrelated use	BASIS4	50%
Ordinary Income Property (e.g.,inventory)	BASIS4, 5	50%

NOTES

1. The “Amount of Deduction” is determined at date of gift. The amount of the deduction is usually either the fair market value of the item donated or the donor’s tax basis in the item.

2. The Amount of Deduction (either fair market value or basis) can be used to offset a percentage of the donor’s adjusted gross income in the year of gift, up to the amount set forth in the “% Limitation” columns. The Amount of Deduction not used in year of gift can be carried forward for five years.

3. The amount of the deduction is the gift’s FMV, and the percentage limitation is 30%. Alternatively, the donor may elect to have the amount of the deduction limited to the donor’s basis (or FMV if lower, see Note 4), and have the percentage limitation increased to 50%.

4. The deduction is reduced from FMV by the amount of gain that would not be long-term capital gain if the asset were sold, which results in a deduction equal to basis, provided that if the basis exceeds FMV, the deduction is limited to FMV.

5. There are special deduction rules for certain contributions of inventory.

I. PRIMACY OF PHILANTHROPIC MOTIVATION

The principal basis for making a charitable gift should be a desire on the part of the donor to support the work of charitable institutions.

V. COMPETENCE AND PROFESSIONALISM

The Gift Planner should strive to achieve and maintain a high degree of competence in his or her chosen area, and shall advise donors only in areas in which he or she is professionally qualified. It is a hallmark of professionalism for Gift Planners that they realize when they have reached the limits of their knowledge and expertise, and as a result, should include other professionals in the process. Such relationships should be characterized by courtesy, tact and mutual respect.

X. PUBLIC TRUST

Gift Planners shall, in all dealings with donors, institutions and other professionals, act with fairness, honesty, integrity and openness. Except for compensation received for services, the terms of which have been disclosed to the donor, they shall have no vested interest that could result in personal gain.

Adopted and subscribed to by the National Committee on Planned Giving and the American Council on Gift Annuities, May 7, 1991. Revised April 1999.