Donations

Before I answer, I have to put in this obnoxious disclaimer: THIS ANSWER IS ONLY FOR ASSOCIATION LIBRARIES.

I’m sorry. I know using ALL CAPS means I’m YELLING. But the distinction is important for these questions, so it warrants boosted volume.

Okay, with that obnoxious disclaimer out there, let’s get to the questions and answers.

QUESTION: Are there any legal restrictions or guidelines that would limit or prohibit our library staff from directly or indirectly assisting in fundraising efforts organized by the library board?

ANSWER: Yes, there are many, but most are surmountable with careful planning. To illustrate both the issues and the careful planning that can surmount them, here are two short stories. [Readers who don’t want to wade through two faux fairy tales to get to an answer can skip to “THE (BETTER) END.”]

Story #1: The Three Friends

Once upon a time, three friends worked at an association library: a library page, a library clerk, and a library director. The three friends didn’t let their differential power dynamic interfere with their friendship and were happy as they put away books, helped patrons, and directed day-to-day operations at the library (respectively).

One day, however, things changed. Out of the blue, the page was directed to make phone calls to all patrons who had borrowed books within the last year to ask for donations to the summer reading program. The clerk was told they would have to work that Friday night, paid, at the “Pizza for Pages” fundraising dinner. The library director was told to write and practice delivering a pitch to seek a large donation from a major regional philanthropic organization.

The three friends’ peaceful[1] work life came to a screeching end. The page worried that the calls to patrons were an invasion of privacy.[2] The clerk did not regard selling pizza as part of his job description. And the library director—while an excellent library director—had never been trained in seeking or managing charitable contributions.

It was all very stressful, and the three friends started looking for new jobs.

THE (CAUTIONARY) END

Story #2: The Three Other Friends

Once upon a time, there were three other friends at an association library: a library page, a library clerk, and a library director. Their differential power dynamic was occasionally an issue in their friendship, but they were united by their love of textiles and trivia.

The three friends were happy as they put away books, helped patrons, and directed day-to-day operations at the library (respectively). They also felt very accomplished in their careers, because in addition to their regular duties, each had specific language in their job description that made them an integral part of the library’s fundraising.

Part of the page’s formal duties were to “help maintain a donor database”—separate and apart from patron records—of people who had expressed interest in donating to the library. The page also sent out regular, scheduled donation solicitations that had been reviewed by the library’s accountant and fundraising counsel, making sure people understood how to make a tax-deductible donation to the library.

Part of the clerk’s formal duties were to “assist with fundraising, event planning, and presentations,” and the clerk’s regular hours were sometimes adjusted (or the clerk was paid overtime) to assist with fundraising events. As the clerk performed this duty, they often had to consult the library’s policies and procedures for working with the volunteers who helped with the events.

The library director felt particularly accomplished, because even though she didn’t have any experience with grants and grant management when she started, the library paid for her to attend training sessions until she was confident about applying for grants and managing them. As the director built these skills, the library board developed and passed policies on managing grants and soliciting/accepting donations, while the library’s treasurer took the time to understand the regulatory requirements of managing donations and grants.

It was occasionally stressful, but the three friends felt supported and confident in their jobs and didn’t spend a lot of time looking through job listings.

THE (BETTER) END

The take-away from these two tales is simple. At an association library, employees should not assist with fundraising unless:

• To comply with both governing ethics and laws pertaining to patron confidentiality, there is great care to not use library patron information to solicit donations. Instead, a completely separate database built using direct expressions of donor interest should be used; frequency of use or borrowing habits should not be referenced in solicitations;
• Fundraising duties are in the employee’s job description[3] (not just “additional duties as assigned”);
• The employees performing fundraising duties are still being supervised by their supervisor,[4] not a trustee, contractor, or volunteer;
• The library has a full array of policies governing gift/donation solicitation and acceptance;[5]
• If seeking grants (governmental or private) is part of the effort, the library has a full array of grant management policies;[6]
• If volunteers are also helping with fundraising, there is a volunteer policy that includes confirming volunteer service by letter, and the volunteers are covered by insurance;[7]
• The library is providing employees required to solicit gifts with appropriate on-the-job training;
• If the library is using a paid consultant or external fundraiser to help with fund-raising, that person or company’s service should be confirmed with a written contract.

Basically, like all things, fundraising by employees at an association library should be planned and overseen with care.

Thank you for giving me a reason to get all that out there!

NEXT QUESTION: Can the library board legally use the library’s official website and existing Facebook account to promote or facilitate board-led fundraising campaigns?

ANSWER: Yes, as long as the library has a full array of policies governing gift/donation solicitation and acceptance, and the policy includes solicitation via social media.[8]

QUESTION: If the above is permissible, is it also acceptable for the board to establish a separate Facebook account specifically for fundraising purposes on behalf of the library?

ANSWER: Yes, as long as the library has a full array of policies governing gift/donation solicitation and acceptance, and the policy includes solicitation via social media.

Unlike other public libraries, an association library is not subject to FOIL, so the considerations about record-keeping that sometimes arise when quasi-governmental entities use social media are not present here. However, a board should take great care to make sure solicitations on the library’s social media account do not distract from the primary purpose of the account, and if the solicitations are on a separate account, that the separate account is still owned by the library.

The member’s careful questions are the right approach this issue. Fundraising by a library—association or otherwise—should never be a spontaneous activity. An association library engaging in fundraising should have a well-developed array of policies, and if library employees have fundraising responsibilities, those responsibilities should be clearly stated. If the library is using volunteers and/or paid consultants to help fundraise, that service should also be governed by policy and with attention to compliance (including a written contract for all external services).

The policies needed to make informed, compliant decisions about your association library’s fundraising strategies and staff involvement are bolded in this answer, and where there are templates or other relevant information, this answer includes them in the footnotes.

Thank you for a serious and important array of questions.

Dear Discombobulated:

First, thank you from the bottom of my heart for using a “nom de Dear Abby,” so I could reply in kind. While I would love to think that the writing in Ask the Lawyer stands on the shoulders of legal luminaries like John Marshall, Antonin Scalia, and Learned Hand, the truth is, it probably draws more from reading “Dear Abby” and “Ask Ann Landers” in my formative years.

Which is fine, because above all, Ann and Abby strove to provide guidance that was readable, and useful.

So, what is a useful guidance here?

First (and I know you know this), it is critical for your library’s board to update the policies that have left you without guidance on this matter.

While it is of course the work of library employees to actually apply the policies during the difficult work of processing archival donations, it is the responsibility of a governing board to adopt (and as needed, revise) the policies that guide them.

In the case of “born digital” donations, this is particularly critical.

Many authors are now collecting their research and arranging their drafts entirely electronically. This means entire works that once took boxes and boxes to hold might be on a single thumb drive. This change in the medium, however, doesn’t lessen the impact of a writer’s archive, which can show us the sources, the inspiration, and (gloriously) the mess[1] behind the smoothly finished product.

The ability to store seemingly infinite data does not mean a library can simply accept and archive everything it is given. In fact, it means exactly the opposite. This is because an archive is not storage; it is a curated collection of information gathered for a specific purpose.

A good example of this is in the public-facing description of the New York Public Library’s Manuscripts Division,[2] which says in part:

While the policies for “born digital” content will generally not be in the public-facing part of an online archive’s website, behind the careful description of the scope of an archive will be the many rules it has for evaluating donated content.

Part of that evaluation will address the concerns the member has posed in their questions: Is the content already “out there?” Is it protected by copyright? Did the author gather the material and further manipulate it in a relevant way (for instance, gathering articles to show who was publishing on a particular topic), or is the information simply gathered for what it offers at face-value?

If the content of a donation fits within the scope of an archive, but largely gathers material that is readily available via other sources, it is unlikely that a policy will support an archive taking the time to re-enter that material. The sole exception would likely be if the unique gathering of material shows something special about the project, in which case it could be archived as one thing, and not a collection of singular objects.

For example: Let’s say I write a best-selling mystery novel mostly set in Grace Church in Utica, New York.[3] To make sure my story is authentic, I make a digital copy of every book and newspaper article I could find about Grace Church, linking events in my novel to events that occurred in real life. When I hit the New York Times bestseller list, I donate my archive (on an external hard drive, for security) to the Utica Public Library.[4]

Upon review, it is very likely the library would conclude that much of the material[5] would be too redundant to separately archive. If, however, I not only made a copy of the material, but then made digital notes on it—showing my thought process as the book was developed—that would be a different thing, and separate cataloging would be warranted.

This would be true even for more recent works that were still protected by copyright, but again, only if the digital copy somehow transformed the work from its state in another catalog.

So, with all that as background, let’s look at the member’s questions:

Is there a disclaimer or notice we can put on the online repository to protect us from potential copyright lawsuits?

Is this a situation where every PDF book and document should be researched first to determine if it is in the public domain or protected by fair use?

Should we simply refuse to put any of those documents online due to the risk?

The answer to this is:

The institution’s policies should be applied to assess if the entire donation is within defined scope of the archives.

The institution’s policies should be applied to assess if any of the materials are generally or easily available in other repositories (whether or not under copyright); if they are, they should not be separately cataloged, because they are redundant.[6]

The institution’s policies should be applied to assess if an array of information, because of its unique combination, is valuable to archive as a whole, even if the separate items are redundant. This means the collection of information could be saved as one item to provide insight into the research or creative process, even if the various items comprising it aren’t separately cataloged and available on an online archive. For copyright concerns, however, it may be better to have such content available for review (in digital format) on-site, only.

I appreciate that the world has (and is) changing rapidly, and many institutions cannot keep up with donations and cataloging, let alone policy review.

This is where the leadership structure of a library, museum, historical society, or archive comes in handy. As we know, at NYSED-chartered institutions, the trustees govern, while the employees manage the institution day-to-day.

Policy starts with governance: ensuring an institution is updating its policies to fit present needs is the responsibility of the board. Applying that policy, once it is established, is the responsibility of employees.

If the policies of an institution aren’t up to evaluating “born digital” donations, it’s time for a policy update. A good method for such an update is an ad hoc committee of board members, employees with relevant expertise, and maybe even a special member like a local scholar or IT specialist, from outside the institution.[7]

To start such a committee, a governing board could pass a resolution such as:

WHEREAS the [institution]’s archives are maintained to gather, catalog, preserve, and provide access to a defined scope of content; and

WHEREAS recent changes in technology require the [institution] to evaluate and refine its approach to digital content (both as donated, and as available via the archives);

BE IT RESOLVED that [NAMES] shall be formed into an ad hoc “Archives Policy Review Committee” for purposes of researching, evaluating, and drafting recommended policy updates to confirm the scope, criteria, manner of evaluation, manner of acceptance, manner of cataloging, methods of preservation, and methods of providing access; and

BE IT FURTHER RESOLVED that such Committee is requested to have a recommended update to current policies by the DATE board meeting; such date to be extended if warranted.

In closing, I have to say to “Discombobulated about Donations”—you are not discombobulated at all! The question shows orderly thinking about how to best use the limited resources of an archive and how to protect your institution from risk.

I’d say you’re “Acing it in the Archives.”

Thank you for a great question.

This sounds like a lovely service to both the library and community, so I am going to make this answer as positive as possible.

First, it is clear from the question that the instructor (a “community member”) is not a library employee. So, they are either doing this as a volunteer or as an independent contractor.

Either way, before we delve into the financial/tax/deduction questions, I have to say this:

If the instructor is a volunteer, because yoga can involve some risk in injury, it is wise to have a letter in place confirming the terms of the volunteer service. That letter would address logistics, how the class is promoted, liability considerations (“hold harmless,” indemnification, insurance), and address the financial considerations (the donation arrangement).

If the instructor is an independent contractor who is getting paid to offer the class, it is wise to have a letter in place confirming the terms of the independent contractor service. That letter would address when/where the class takes place, how the class is promoted, liability considerations (“hold harmless,” indemnification, insurance), and finances (the donation arrangement).

For any library (and Friends), although incidents of injury are rare, because of the potential cost, addressing these “liability considerations” is critical. As it so happens, they can be addressed in the same letter that addresses the financial aspects.

Okay, now we can discuss the financial aspects.

The good news is that the member is 100% right: Perhaps a simple solution would be to re-word how this is done…

Exactly.

We won’t go over wording for all the combinations,[1] we’ll just deal with this scenario: a free, donation-accepting class conducted by a volunteer, with the donations turned over to the library, to be turned over to the Friends.

The issue here, of course, is: what is the donated income from the class—a direct donation to the Friends (held briefly by the library) or direct payment to the instructor?

This distinction is important.

If money paid by the attendees is a direct donation to the Friends, the instructor cannot claim a deduction for it (since it was never their income, it was only ever a donation).

If, on the other hand, the money paid by the attendees is a direct payment to the instructor, it can then be a donation from the instructor and to the Library/Friends.[2] That shouldn’t be a problem, unless the income is not declared.[3]

There is no scenario where the donations collected can become the value of the service that was volunteered, and thus the credit is for “in-kind” services. The IRS doesn’t work that way.[4]

The issue presented here is not rare or esoteric. In fact, it is so common, the IRS has a fancy name for it: the “assignment of income doctrine,” which basically says that if you earn money and immediately give it away, it is still taxable income. 

To clear this up, the member’s “re-wording” suggestion is spot-on. However, before changing the publicity, it would be good to focus on the arrangement, so there is clarity between the instructor, the library, and the Friends. After that, the advertisements can be updated to fit the agreement.

Where can you get such a letter? It is best for a final version to be reviewed by your lawyer, but as it turns out, we occasionally get questions about yoga here. So, two places to start are Live streaming a chair yoga program and Liability Waivers for Library Fitness Programs.

In closing: Yoga is a beautiful activity and a library hosting it is providing a valuable community resource; the law and the IRS should never get in its way. With a careful arrangement, that can happen.

Thank you for a thoughtful question!

 

Many libraries do indeed have materials[1] that are unpublished, one-of-a kind, original works, such as photographs, letters, drawings, and recordings. 

Some of these works may have significant financial value, while some may be more valuable in terms of local history and culture.

When the donors of such works are deceased, a library is best suited to use them[2] if they can show they have ownership of both the physical object and copyrights.

As the member points out, the copyright will survive the life of the author. And so they ask:

1. If a library/archives lacks a deed of gift (or if the deed of gift doesn’t explicitly transfer copyright), can an heir transfer copyright or otherwise provide permission for the library to publish/digitize/etc?
2. In NY, are copyrights automatically transferred to heirs when someone dies?
3. What if there is no will?

To illustrate the answers to these questions, let’s create a hypothetical scenario:

Person ABC[3] was a long-time member of the Library.  Prior to their death at the age of 98, they left the Library 200 sketches. Some library workers still remember the day Person ABC dropped them off, but there is no documentation (“deed of gift” or other document acknowledging the donation). The Library would like to create a special collection to house the sketches and to digitize them for inclusion in an online archive. The Library has found their surviving spouse, child, and the executor of the estate (who has zero information about the sketches, which were not mentioned in the will).

First, the Library can work with the heirs to obtain an acknowledgment letter confirming there is no disagreement regarding custody and ownership of the physical objects.

Second, the Library can work with the same people to obtain an assignment of copyright, since without a will, the copyright would have passed to Person ABC’s heirs.[4]

And third, the Library can initiate outreach for the letter with an outreach letter summarizing the situation and the parties’ communications.

Here is a sample of the outreach letter:

As you know, the Library has 200 sketches by Person ABC and remains grateful for the donation of these items.

Recently, the Library has been taking steps to formally accession the sketches Person ABC left to the Library. This work includes planning to make digital images of their important work available for purposes of research and scholarship.

To ensure we can put accurate and helpful information about the pictures in our archive and to facilitate its use for scholarship, the Library has two requests:

First, can you kindly sign the accompanying donation acknowledgement? We know that the sketches were left to the Library, but this acknowledgement will help us document their provenance.

Second, if you are amenable, can you sign the accompanying “Assignment of Copyright?” This will position the Library to archive the sketches digitally and to allow use of images for purposes of scholarship and research. 

Thank you for considering providing the Library with this documentation. Please don’t hesitate to contact me with any questions.

Sincerely,

Director

Here is a sample of the Donation Acknowledgement:

DONATION ACKNOWLEDGEMENT

The undersigned: NAME and NAME (“Acknowledging Parties”), all being at least 18 years of age, hereby review and acknowledge:

1.  To the best of our joint and individual ability to determine, the sketches listed below (the “Photographs”) were created by Person ABC:

[insert list/description]

2.  A copy of each of the Sketches is attached as “A.”

3.  To the best of our joint and individual ability to determine, the physical copies of the Sketches were given to the Library by Person ABC in approximately YEAR.

[include signature and witness blocks]

 

Here is a sample of the Copyright Assignment:

COPYRIGHT ASSIGNMENT

The undersigned: INSERT NAMES (“Assigning Parties”), all being at least 18 years of age, hereby review and acknowledge:

1.  To the best of our joint and individual ability to determine, the sketches listed below (the “Sketches”) were authored by Person ABC:

[insert list/description]

2.  A copy of each of the Sketches is attached as “A.”

3.  Person A was born on DATE and died on DATE. 

4.  The Assigning Parties were their only heirs.

5.  Any and all rights to the Sketches possessed by the Assigning Parties per the Copyright Act and the Estates Powers & Trust Law are hereby assigned to the NAME Library.

[include signature and witness blocks]

 

For the most part, confirming that the natural heirs have acknowledged the gift—and that they convey any copyrights they have inherited—will ensure no competing claim can muddy the waters of using the works for archival and research purposes.

There is, of course, one large wrinkle here.

What is it?

Money.

In the event the works in question become valuable, the above-listed recital might not be enough.

To illustrate why, let’s return to our scenario...

As it turns out, Person ABC was a famous space marine, although tales of their exploits have only recently made it back to earth. Consequently, interest in her 200 sketches of rocks, deserted wasteland, and tentacles emerging from blown hatchways is WAY up, and a famous movie producer is offering millions of dollars to license her work and story.

Just as the Library is about the sign a deal that will ensure the Library will be able to repair its leaking roof and to add a new “Person ABC” science-fiction wing to the Library, one of the people who signed the Gift Acknowledgement and Copyright Assignment calls a press conference and says “I signed those documents before I knew what I was doing.” They then hire a well-known lawyer to try and argue that the documents are invalid.

Cases that deal with contested “deeds of gifts” and donor documents are all over the place.  When enough money is on the line, every detail will be scrutinized.  Was Person ABC of sound mind when they gave the Library the documents?  Did they unfairly disinherit their child?  Is one of the witnesses now a known liar? 

No amount of customized legal drafting can forestall these types of objections, but here is the take-away: whenever possible, a library or other cultural institution should use a customized donation document reviewed by a lawyer to ensure it is as strong as possible.  The more valuable the asset, the more it is essential to draft and review the documents to meet the specific circumstances. 

Thank you for an excellent question.

Because it would muddy the core element of this question (Should we have any concerns with donating our discards to [Internet Archive]?), this answer is not going to address the various legal and regulatory requirements different libraries may have when it comes to disposing of discarded books.[1]

With that out of the way, we can dive right into the member’s concerns about liability “for contributing to potentially illegal activity.”

Internet Archive describes its work this way:

“Because we are a library, we pay special attention to books. Not everyone has access to a public or academic library with a good collection, so to provide universal access we need to provide digital versions of books. We began a program to digitize books in 2005 and today we scan 4,300 books per day in 18 locations around the world. Books published prior to 1927 are available for download, and hundreds of thousands of modern books can be borrowed through our Open Library site. One of the Internet Archive's missions is to serve people who have difficulty interacting with physical books, so most of our digitized books are available to people with print disabilities (learn about access here).”

As the member’s question alludes to, some of the content on the “Open Library” has brought accusations of copyright infringement, which Internet Archive has defended under the “controlled digital lending” theory of “fair use”.

The most notorious case is Hachette Book Grp. Inv. V. Internet Archive, decided by the U.S. District Court for the Southern District of New York on March 24, 2023, which found that when not limited to use for search functions or adaptive copies, certain scanning and (controlled digital) lending of books still protected by copyright is not defensible as “fair use.”

The decision was a blow to Internet Archive, which is committed to not only making content digitally available but to decoupling that access from the commercial exploitation of user identity. For an elegant an annotated discussion of this topic, review the amicus brief of Center for Democracy & Technology, Library Freedom Project, and Public Knowledge.[2]

The case is now being appealed, with allies showing up on both “sides.”

With all that going on, Internet Archive is still going strong and still accepting donations.[3] The question that this member asks is: if my organization donates our discarded hard copies to IA,[4] can we also get implicated in alleged infringement?

Bearing in mind that anyone can be sued by anyone for anything at any time, the answer is otherwise: no.

The basis for this answer is Section 109 of the Copyright Act, which provides that “the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

This “first sale” doctrine, as it is referred to, does not cease to operate when a party knows or may know that the purchaser or recipient has been found to infringe copyright in the past. In addition, as the ruling in Hatchett points out, there are a number of legitimate uses Internet Archive can make of scanned versions of donated copies.

While it is true that there can be “joint liability” or “vicarious liability” for every person in a “chain of infringement,” providing copies in a manner covered by Section 109 (i.e. selling or donating a lawfully obtained copy) is not one of them.

On the topic of donating to Internet Archive, I will also say: because Internet Archive is attempting to break new legal ground,[5] supporting them is controversial in some circles,[6] while it is an almost sacred duty in some other circles. [7] So, aside from considerations of liability (which, so long as the donations are hard copies, will not pose a concern), it makes sense to review the status of the cases, and decide where your organization stands.

This issue—the question of a public library acting as a pass-through on an ongoing and open-ended basis for its Friends—is like a mouse seeking cheddar[1] cheese in a maze.

Picture the mouse: whiskers a-quiver.[2] It can smell the cheese. It sees the maze.

Picture the cheese: it's yellow, made in upstate New York, and sliced just right. It would be delicious with a whole wheat cracker.

Now picture the maze: so tantalizing. So twisty and turny. There are many paths forward, but only one has a tantalizing dairy product[3] at the end.

Except: there is actually no path to the cheese.

That's what this issue is like.

Here's why:

With a "pass-through", a 501(c)(3) agrees to accept the award of a tax-deductible donation; usually, this is done per the terms of a "pass-through agreement"[4] with a non-501(c)(3) individual or group, for a charitable purpose.

Examples of a pass-through include:

• A school district public library and a local artist agree to jointly apply for a grant from a foundation so an unincorporated artists collective can paint a mural at the library, but the grant is solely to the library, who "passes" the money to the artists' group for the project;
• A municipal public library affiliates (in writing) with a newly incorporated not-for-profit refugee assistance group without a 501(c)(3) to accept a grant for a language assistance program;
• An association library agrees to be a pass-through on a per-project basis for any local group offering programming consistent with the mission of the library; per the letter of agreement by which an organization in the area of service can participate, the administrative fee charged by the library is either 5% of the grant or $1500, whichever is smaller. Participants are tied to a strict set of performance criteria and accounting is set up to ensure documentation is immaculate.[5]

While there are a variety of fiscal and operational procedures that each of these written arrangements would have to follow, each of them shares a common feature—an endgame to the purpose of the pass-through (e.g., the mural is painted, the English-language learners program is launched, and the objective of each "per project basis" is met).

The member who submitted the question rightly highlights the crux of the question here: can this approach be used for unspecified purposes, with the 501(c)(3) accepting tax-deductible donations and then giving it to the non-501(c)(3) entity?

The answer is "No." Here is why:

In the three examples, and other defensible pass-throughs, the donation money going to the unincorporated or non-501(c)(3) entity is conditioned on the objectives set by the grant. In other words, the money is not a gratuity or a donation; it is part of a "quid pro quo" transaction, with the "quo"[6] being consistent with the conditions of the donor.

Accepting unconditional donations to then re-gift them to an unincorporated or non-501(c)(3) entity is a totally different situation from the "quid pro quo."[7] For an association library, it would be frowned upon, but with some careful maneuvering (a written agreement making the Friends an offshoot of the association library's operations), it could be done and properly accounted for in the required financial disclosures.[8] But for a municipal library, with its extra conditions and an absolute bar on just giving away money,[9] there is no way to make the otherwise elegant solution suggested by the member work.

So, the maze of options has no way to get to the cheese. Is there another way?

There is, but it is largely antithetical to the purpose of having a "Friends" group.[10]

Here is the way: the donations to the public library would go to a "Friends Fund" that is 1) always in the custody of the library; 2) managed and expended per all the fiscal controls of the library; and 3) is only distributed to Friends per an agreement that creates defined conditions (the "quid pro quo") , so it is clear the funds have been used "for the benefit of the library."

For example: The board of the ABC Town Library resolves to create a "Friends Fund" for very well-defined parameters, including that when the fund reaches $50,000.00 dollars, the board meets with the Friends to discuss how it will be used. In 2024, 100 people each donate $500.00 tax-deductible dollars to the ABC Town Library's "Friends Fund." The library’s board of trustees then meets with the Friends and passes a resolution to disperse the money with well-defined deliverables, effectively turning the collected funds into a "grant" or even a "contract for services." The grant or contract is then managed per all the same applicable fiscal, operational, and procurement requirements that the library always has to follow.[11]

Of course, by the time a library and friends group go through all that—only to have a structure that is far less flexible than a traditional Friends group—the Friends might want to just take the time to get 501(c)(3) status.[12]

Thank you for a thoughtful question.[13]

Congratulations on the offer!  It is always good to have the local library so well thought of that people want its footprint to expand.

And congratulations on immediately thinking about practicalities:

• Are there any legal concerns we should be aware of before accepting this gift?
• Would we need a real estate attorney?

The answer to both questions is "yes."  Here is why:

To formally transfer ownership of land, a document called a "deed"[1] is recorded in the office of the county clerk.  This process is relatively simple[2], and sometimes, parties do record a deed without a lawyer involved.  However, the answers to the member's first question ("Are there any legal concerns we should be aware of before accepting this gift?") are the reasons why a library (or any non-profit) should involve their lawyer and/or a real estate attorney right from the contemplated acceptance of the donation.

When a party offers a gift of land, or a party contemplates buying land, there are numerous legal, strategic, and risk factors that must be considered.  While I could name about fifty[3], I'll start with the top five:

1. Does the party offering the land actually own it?

This is called having "clear title", and it means that as part of the donation, it has been verified that the property doesn't have a co-owner or alleged owner who could swoop in and say they own it.  While a library or other not-for-profit can take property without getting assurance of it, it is best to spend the resources to do a "title search" to make sure the title is "clear" (especially if the library might build on it later).

2.  Does the land come with any burdens, hazards, or conditions?

Did the neighbors build a chicken coop over the property line?[4]  Is there a tree on it that poses a hazard, hanging over the boundary line?[5]  Does a nearby neighbor use the property for parking?[6]  Does the donor want to impose any restrictions on the donation?[7]

Many of these concerns won't be immediately obvious or stated up-front.  A real estate agent, inspector, and lawyer viewing the property and reviewing the deal can help assess them early on, to make sure they aren't a deal-killer.

3.  Is the land polluted?

It is always good to check the EPA[8] and DEC[9] to see if there are any environmental concerns associated with the area; if there has been any industrial activity or gas station nearby, it is also wise to consider checking the soil.  This is especially true if the donation is being considered as the site of a community garden or play area.[10]

4.  Is the land useful to the donee?

As a gardener and lover of buildings, to me, almost all land is good land, but for a library that might not be the case.  If the library's strategic plan doesn't support the property becoming part of routine operations (as a garden, additional parking, site of a future expansion, outdoor play area, apiary, picnic table area, landscaped buffer zone, community compost site, or any other useful purpose consistent with the library's mission in your community), the donation might be a kind but unsuitable offer. Don't be afraid to say no if it's not a good fit.

5.  Can the donee (the library) use it as envisioned?

Before "taking title" (becoming the owner) the library should work with its architect and lawyer, along with a local government planner, to confirm the donated property can be used for the purpose envisioned by the library.  For instance, if a parking lot is envisioned, but a local ordinance bars additional parking, a lawyer and/or architect can work to see if special permission can be obtained.

And that's the "top five."  For all these reasons (and many more), a donation of land—if otherwise welcome—should be joyfully received with this type of professionalism: "Thank you so much!  The library would like to move ahead with exploring this offer.  Do you have a lawyer you are working with on this, or do you want to work with [director/trustee/committee] and our attorney directly?"  After which the connection can be lawyer-to-lawyer (the most efficient, but a little cold) or party-to-party (with lawyers working in the background), and all the legal, strategic, and risk factors can be addressed.

Typically, a "closing" (the day of transfer) will involve lawyers exchanging the following documents and/or information:

• Contract of "sale" (donation)
• Title search
• Proposed deed (with any conditions)
• Survey of the property
• RPTL forms
• Secretary-certified copy of board resolution to accept donation
• Agreed-upon method of valuing the property for donation purposes
• Agreement of who is paying the bills (sometimes a not-for-profit will pay the "closing costs" of a donation, sometimes the donor will.  This should be determined at an early phase of the deal)

After closing, the donated land will belong to the library.  At that point, the lawyer for the library should already have discussed with the library any purpose to which the property will be used (even if it will just sit there for a while, as a buffer).  The library should be budgeting for care of the property, and the library's insurance carrier should be notified that land is being added to the library's insured property.   If "no trespass" or other signage is needed, that should go up as soon as possible.

Add at least 10 other custom details unique to that library, property, donor, and the municipality it is in, and that is what the transaction should look like.  You will note that many of the considerations here don't relate solely to real estate—they relate to the operations of your library.  For that reason, while a real estate lawyer (who only handles the closing) can be involved, it is ideal to use a lawyer who knows the priorities, plans, and particular needs of your library.

Thanks for a great question. I hope the offered donation is suited to your library's needs, is pollution-free, and the closing goes smoothly.

[NOTE: For exciting recent commentary and a model policy about fund-raising along with or on behalf of third parties (like Friends), check out this RAQ, addressing libraries assisting Friends groups with fund-raising activities.  The following response is limited to the very narrow issue of collecting donations on behalf of other (non-Friend) organization, as described in the question.]

You see them everywhere (although perhaps not as much as you used to): donation boxes for charities at the front desks of various institutions.  They can pertain to just about any worthy cause:

• Medical research
• A local preservation movement
• A fund-raiser for a specific person in need
• Trees, bees, flowers, pollinators
• Clothing

In the question, it's a Lion's Club eyeglass donation box, and, apparently, a cause that uses old sneakers.[1]

Whether it's money or tangible goods, a public library is (in the minds of charitable organizers everywhere) a great place to put out a collecting box and ask for donations.

The issue is, as pointed out by the member, that it can be both inconvenient[2], and pose risk and legal compliance challenges.

Although the legal compliance challenges the member points out are primarily fiscal (relating to state and federal conditions and restrictions for charitable fund-raising), they are also related to access and fairness--since agreeing to host a donation box for one entity means the library has to have a fair and equally applied standard before rejecting the donation box of another.[3]

These compliance challenges have their roots in the following legal factors:

• As pointed out by the member, state laws pertaining to solicitation of donations[4];
• Fiscal liability when resources intended for a third party are collected and stored on site at a library;
• Random risks potentially created by accepting donations of money and tangible goods (theft, contamination, litter, fire).

A library facing this issue has three options:

Option 1.  As a matter of policy, to not host donation boxes for third parties;

Option 2.  As a matter of policy, to use an application process and set criteria for hosting a limited number of solicitations (or perhaps just one) at any given time;

Option 3.  As a matter of policy, to use an application process and set criteria for hosting an unlimited number of solicitations at any given time.

If a Library uses "Option 1", they have very little to worry about--no financial liability, no fraud to stop, and no risk of inconvenient donations cluttering up the library.  Sure, it's sort of the "Grumpy"[5] option, but it also means resources can be focused on the main mission of the library (which is 100% A-OK).

If a Library uses "Option 2" or "Option 3", as the member points out, there needs to be a mechanism to filter out potentially fraudulent solicitations (solicitation for the non-existent "Human Fund"[6]), and to ensure the library can impose reasonable limits on how long the donation box or solicitation is present.  The best way to do this--although it will cull out certain ad hoc efforts, like money to go directly to a family impacted by a fire[7]--is to ensure the solicitation will only be by a charity registered in NY.[8]

Please find template policies addressing these options, below:

Option 1 ("Grumpy")

NO DONATION BOXES; [NO] DONATION SOLICITATIONS

1.  Donation Boxes

The NAME Library respects all charitable endeavors, including the ongoing or special solicitation of donations in support of worthy causes.  However, since the Library does not have the capacity to monitor on-site donation boxes, we cannot allow them on Library premises. 

2. Donation Solicitations

Solicitations and notices about fund-raisers can be posted on our community notice board at [location]. OR We do not currently have a location for the public to post solicitations and notices about fund-raisers.

Option 2 ("Very Limited")

DONATION BOXES; [NO] DONATION SOLICITATIONS

1. Donation Boxes

The NAME Library respects all charitable endeavors, including the ongoing or special solicitation of donations in support of worthy causes.  However, since the Library has only limited capacity to monitor on-site donation boxes, we can only allow limited amounts on Library premises.

Charities registered with the NY Attorney General's Charities Bureau may apply to have a solicitation box at the library for up to 2 months per year; selection will be made in order of application.

To apply, please send a letter letting us know:

1. The name of the charity and New York State Charities Bureau Registration #

2. The purpose of the donation

3. What is being solicited (money or donated goods)

4. The size of your donation box (cannot exceed AMOUNT)

5. Who from your organization will be at the library no less then 1 day per week to empty the donation box.

6. A complete list of board members and contact information for your charitable organization.

Failure to empty the donation box on a weekly basis will result in permission being revoked. The Library is not responsible for loss or damage to donated items.

Electronics and any items containing batteries, food, and items that may interfere with the routine environment of the library may not be donated.

Use of this is limited to # months per year, per organization.

The library may cease offering this courtesy without notice.

2. Donation Solicitations

Solicitations and notices about fund-raisers can be posted on our community notice board at [location]. OR We do not currently have a location for the public to post solicitations and notices about fund-raisers.

Option 3 ("Many at Once")

DONATION BOXES; DONATION SOLICITATIONS

1. Donation Boxes

The NAME Library is able to offer space for soliciting donation to local charities registered with the New York State Attorney General's Charities Bureau. To apply, please send a letter letting using know:

1. The name of the charity and New York State Charities Bureau Registration #

2. The purpose of the donation

3. What is being solicited (money or donated goods)

4. The side of your donation box (cannot exceed AMOUNT)

5. Who from your organization will be at the library no less then 1 day per week to empty the donation box.

6. A complete list of board members and contact information for your charitable organization.

Failure to empty the donation box on a weekly basis will result in permission being revoked. The Library is not responsible for loss or damage to donated items.

Electronics and any items containing batteries, food, and items that may interfere with the routine environment of the library may not be donated.

Use of this courtesy is limited to # months per year, per organization. The library may cease offering this courtesy without notice.

2. Donation Solicitations

Solicitations and notices about fund-raisers can be posted on our community notice board at [location]. OR We do not currently have a location for the public to post solicitations and notices about fund-raisers.

As with any model or template policy, the above language should be reviewed by your local attorney and contrasted with your other fiscal and operational policies to ensure it is consistent and reflects the priorities and practices of your unique institution.

I wish you well with helping charities accept donations, of any type or size!

Following our "do not reinvent the wheel" rule for "Ask the Lawyer," prior to diving into this, we checked the "Trustees Handbook" posted at https://www.nysl.nysed.gov/libdev/trustees/handbook/handbook.pdf.  On page 57, it provides an excellent summation of the concern at play in the issue of trustees and fund-raising:

"Public library boards generally take care to separate private fundraising efforts (such as direct personal solicitations, as opposed to seeking grants from foundations or government agencies) from normal library operations and board activities since there are restrictions on the appropriate use of public funds." [emphasis added]

The Handbook then points out that this concern is why many public libraries use "Friends" to personally solicit and raise funds.

To this concern about limits on the use of public funds, I would add that when it comes to raising money, it is very easy for the solicitation to run afoul of charitable regulations, required accounting, and limits on allowed fund-raising activities (such as games of chance).

But does this caution merit a complete bar on such solicitations?

To explore that, let's explore the risks.  And we're also going to talk about "raffles", so hang in there, association libraries...this one's for you, too.

Before a board solicits gifts, it should have a full suite of "fiscal controls" and accounting practices to govern how the solicitation is done.  A policy on soliciting/accepting donations, and policy on fund-raising events, a policy on procurement...if a board ensures that its actions in soliciting gifts are following a legally compliant policy, this mitigates the risk of no-compliance.

Let's take the member's specific situation as an example: Could trustee solicitations of gift cards for a raffle used as an inducement to participate in a survey on library use be done carefully enough to avoid a concern?

Here are the risks in such an endeavor: the library is planning to 1) have trustees ask for donations of gift cards; 2) use the cards as an inducement to fill out a survey; then 3)  "raffle" the donated cards; then 4) use the answers from the survey "to assess what the community wants to see in the library now and in the future."

Of the 4 things listed above, only #1--the solicitation of the cards--doesn't give me pause.  If the library has a good donation acceptance policy, and the cards are donated per that policy, and the library follows the conditions for the donation...then it is just another donation.

#2 poses a risk that is pretty easy to mitigate with a little caution.  In the world of not-for-profits in New York, a "raffle" is a "game of chance".  This means a "raffle" can be considered "charitable gaming" which can require registration and particular accounting (see General Municipal Law of New York (Section 186), and registration).

However, as defined by law, a "raffle" in New York requires the purchase of tickets for payment of money.[1] Since the draw described isn't technically a "raffle" (it's a drawing), to avoid any confusion, it might be good to avoid using that word.[2]

In addition, if you have time, it would be good to call your local County Clerk to make sure they don't regard the use of raffle tickets without payment of money to be a "raffle."[3]

Okay, the "raffle" concern is pretty easy to ameliorate. My concerns about #2 and #4 are a little more subtle and tricky.

As stated, the library is hoping the lisupare[4] will inspire people to fill out a survey to assess what the community wants to.

This means that the library hopes to use the results of the survey to make decisions about such things as programming, collection decisions, and the library facility.  From the sound of it, the input could even be used to develop plans for renovation or new construction funded by a bond or other municipal funding initiative in the future.

I imagine you see where I am going here.  By offering a reward with a defined financial value for participating in the survey, the board would risk the assertion of a direct link between financial compensation and a person filling out the survey a certain way.

I know.  This seems ridiculous.  But complaints have been made about far more innocuous things.

To avoid this, I suggest the library consider a different approach to incentivizing broad community participation in the survey. For instance, each person who completes one gets a leaf ornament or token to hang on a display, so the community can see how many people have taken time out of their day to give their feedback to the library.[5]  In this scenario, the trustees could request donations of the ornaments or display (which can then become part of the library's stock of display materials) can just follow the usual policy for accepting donations.

I am sorry to have to write this; I hate throwing cold water at good ideas.  Further, I am not saying the "raffle" (uh, that's "lisupare") is outright wrong.  But libraries function in large part because of the love and trust they foster in the public.  While the notion of a chance to be selected for a monetary gift for taking the time to complete a library survey is lovely, I think it can be interpreted wrongly--either in the moment, or down the road. 

Thank you for trusting me with this question.[6]

 

 

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[1] Per GML 186 3-b, a "raffle", when conducted by a not-for-profit in NY, is a " game of chance in which a participant pays money in return for a ticket or other receipt and in which a prize is awarded on the basis of a winning number..." etc.

[2] You could go with a made-up word like "lisupare" ["Lie-soo-puh-ray; noun; definition: a randomly given library survey participation reward.]

[3] To address this, I called the NYS Gaming Commission.  Let's just say that unless you are reporting suspected gaming crimes, the Commission doesn't like to get in touch over the phone.  So, then I scoured their materials on "charitable gaming" at https:/www.gaming.ny.gov/charitablegaming/.  While it is clear the law requires "payment" which is defined as "legal tender, check, or credit card", I didn't find anything ruling out a situation like the one described (people "paying" for a raffle ticket by performing a task).  So, getting assurance from your county clerk, who keeps an eye on local charitable gambling, is a good idea.  Hopefully, they will laugh at the very idea that this could be seen as a "raffle."

[4] See footnote #2.

[5] I am a lawyer, not a professional display-maker, so I have no doubt a library employee with experience making displays can come up with a much, much, MUCH better version of this.

[6] Just so readers know, I spoke with the director who submitted this question, who was very cool about all my agita.

There are a few scenarios where a capital project, such as a renovation, could start with a vote of the electorate of a school district library.[1]  If the project is subject to a bond, requires a tax levy increase, or is somehow tied to a referendum, the voters' go-ahead might be needed before work[2] can begin.  In addition, if a municipality or district was deeding over a gift of real property, that could require a public vote, as well.

However, in the scenario described by the member, the money is "in the bank" and is not conditioned on obtaining further funds from the taxpayers and no additional real property needs to be purchased or funds need to be levied or raised.

With that, while in library law I make it a rule to "never say never" in this case, I don't see a need for a public vote.  Just follow the rules of procurement![3]

 

 

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[1] Which is how the phrase "public vote" is used in the question.

[2] "Work" has a variety of meanings in this context; it could include hiring an architect, or purchasing real property, or putting an actual shovel in the ground.

[3] As with other major purchases by public libraries, compliance with competitive bidding requirements in capital projects is key, even if the library is using donated funds.  For more on this, visit https://www.osc.state.ny.us/files/local-government/publications/pdf/seekingcompetition.pdf.