A gift consists not in what is done or given but in the intention of the giver or doer -Lucius Annaeus Seneca

Unlike the quote above, Wisconsin law regarding gifts to school districts considers both the gift given and the giver’s intention.  Both factors impact whether a school district can and will accept a gift made by a third party.  Through this article we will explore the legal requirements for school districts to accept and use gifts made by a third party. 

Wisconsin Statute §118.27 authorizes school districts to accept and use of gifts or grants of furniture, books, equipment, supplies, moneys, securities, or other property used or useful for school research and educational purposes.  The statute also addresses where said gifts shall be deposited, the school district’s requirements regarding donor or grantor specifications and the procedure for transfer of the gift to a community foundation. 

Gift Criteria

School districts have broad authority to accept or reject gifts offered by citizens or businesses.   When offered a gift, school districts should consider whether the gift will be “used or useful for school research and educational purposes” as provided in Wis. Stat. § 118.27.  To make this determination, school districts should adopt a policy that lists specific criteria that the school district uses when making a determination if they wish to accept a gift.  Examples of common criteria school districts use include, whether the gift’s purpose is consistent with the needs or interests of the school, whether the gift creates additional costs, whether the gift is contingent on any conditions or recognition, and whether the gift would interfere with school board’s ability to determine the educational program. 

Under Wis. Stat. §118.27, a school district “shall make use [of the gift] or invest the same in the case of moneys as the donor or grantor specifies.”  Thus, the school district should carefully consider whether to accept a gift with conditions or restrictions.   Some school district policies expressly reject any gifts donated with direction or restrictions.  Other school districts accept gifts that come with direction and restrictions provided they otherwise comply with the school district’s policy. 

School districts should also consider whether there is any discriminatory intent or impact with regard to the gift or the conditions tied to its acceptance.  Wisconsin Pupil Nondiscrimination law, Wis. Stat. §118.13, specifically prohibits discrimination because of the person’s sex, race, religion, national origin, ancestry, creed, pregnancy, marital or parental status, sexual orientation or physical, mental, emotional, or learning disability.  Pupil nondiscrimination protections extend to school district admission, participation, and benefits of school district curricular, extracurricular, pupil services, recreational or other programs or activities.   School boards should consider whether accepting a gift or implementing any conditions would violate the school district’s pupil nondiscrimination policy or Wis. Stat. §118.13.

Managing Financial Gifts

Under Wis. Stat. §118.27, school districts must place all money received in in the school district treasury but consider them segregated funds.  Further, the statute requires that if the gift is not subject to restrictions or conditions, the school district may invest the money subject to the laws applicable to trust investments.   Under Wisconsin law, trustees must invest funds according to the “prudent investor rule,” which specifically states, “a fiduciary shall invest and manage assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the estate, trust, conservatorship, or guardianship.  In satisfying this standard, the fiduciary shall exercise reasonable care, skill, and caution.”.  Wis. Stat. §881.01(3)(a)  In making investment with the moneys that have been gifted, the school district must take extra care to assure this standard is met.

Alternatively, school districts may transfer gifts to a community foundation form management and investment.  A community foundation is defined as “a charitable organization, described in section 501(c)(3) of the Internal Revenue Code and exempt from federal income tax under section 501(a) of the Internal Revenue Code, dedicated to encouraging and assisting charitable activities and enterprises in a designated community in this state and having expertise in finance, fund development and grantmaking”.  To transfer a gift to a community foundation, both the school district and the community foundation must agree in writing to certain conditions.  Specifically, the community foundation must agree to disburse the gift to the school district upon written request of the school district.  The disbursement must be consistent with the donor’s intent and with the agreement of the school district and the community foundation.  Outside of that, the school district shall retain control over how the disbursements of the gifts and grants are made.  

Tax Treatment

Finally, donors often ask whether gifts to a school district are tax deductible.  The deductibility of gifts to school districts can be a powerful incentive for donors to make gifts to a school district.  According to the Internal Revenue Code, gifts made exclusive for public purpose to political subdivisions of the state, which includes school districts, are recognized as charitable contributions.  Substantiation by the donor/grantor is usually requested for tax preparation purposes. 

Typically, substantiation of donations is required for a donation with value greater than $75 where the school district provides any goods and services in return for the donation.  Further, substantiation by a written acknowledgment of the receiving organization is required for donations exceeding $250 in value.  In these instances, the school district should provide the donor with a written acknowledgement of the gift, which includes a description of the property, and a statement of whether the donor received any goods or services from the school district in exchange for the gift.  If the donation exceeds $5,000, the donor will be required to provide an appraisal as to the value of the property donated.  This is a requirement of the donor.  Thus, receiving school district is not required to provide the appraisal and should not do so.


Wis. Stat. §118.27 provides school districts clear instruction on the acceptance and use of gifts.  However, school districts should supplement the statute with well written policies for accepting gifts to provide clarity in the school district’s goals and procedures.  School districts should also plan for managing gifts to ensure they comply with Wisconsin laws related to trust investments or seek partnership with a local community foundation.  The availability of tax deductions for gifts may assist with soliciting gifts; however, the school district must be cognizant of the substantiation requirements relating thereto to ensure that the tax deductibility is enforceable with the Internal Revenue Service.  With careful planning and consideration, third party gifts can be very helpful to supplement school district programs and activities when funding is tight, and resources are limited.

For questions regarding this article, please contact the author,

or your Renning, Lewis & Lacy attorney.

Kelly J. Schwab

Kelly J. Schwab

kschwab@law-rll.com | 920.230.4582

Our legal updates provide general information only and are not intended to provide legal advice or create an attorney-client relationship.