In-kind donations can be a big part of a nonprofit’s budget and show the good work being done. Knowing how to accept, acknowledge, and track these types of gifts is important. Does your nonprofit organization keep track of all the in-kind donations you receive?
How does your nonprofit track in-kind donations? Many organizations are confused on the best practices and therefore, don’t always understand how to track these types of donations.
In-kind: Donation of goods, products, or services instead of cash.
Pro bono: Professional service given voluntarily and/or without payment, using the specific skills of the professional.
An in-kind donation, also known as gifts in-kind, donated services, or in-kind contributions, are goods and services used to carry out the nonprofit’s mission.
Examples can include:
Free or discounted use of facilities for operations, programs, or events
Professional services to carry out the mission such as medical care by healthcare professionals
Office furniture, shipping supplies, computers, hardware, and software used for operations
Clothing, sports equipment, vehicles, food, and medical supplies used for programs and services
Items to be sold in auctions or use of property, such as vacation rentals, for resale
Gift Acceptance Policy
The best thing nonprofit leadership can do for an organization, for staff and for donors is to have a gift acceptance policy and procedures. True story: I worked for an anti-domestic violence organization and received a called from Hustler magazine who wanted to sponsor our golf tournament. Because we had a gift acceptance policy, we could easily state that the potential donor did not reflect the mission and values of our nonprofit and we refused the gift.
A simple gift acceptance policy should include the following:
Types of gifts your organization accepts.
Types of gifts your organization does not accept.
Acceptable sources of gifts (individuals, corporations, governments).
Acceptable conditions of the gifts (new, gently used and how this is determined).
Types of gifts that require a review before being accepted (real estate, equipment, art) and who is responsible for the review (legal counsel or other specialized professionals).
How gifts will be recognized.
Gift acceptance policies vary in length and detail depending on the size and scope of an organization.
In-Kind Donation Form
A standard form helps everyone. This form is filled out by the donor, regardless of the non-cash item and includes:
tax ID number and name of the organization
donor’s contact information
date gift received
detailed description of the gift
estimated fair market value of the gift
calculation of value
statement that no substantial goods or services were received in exchange for the donation.
Information from this form is then added to the donor’s record in the organization’s donor database.
In-kind donations must be recorded and acknowledged like cash donations. However, there is one major difference, the donor is legally responsible for providing the fair market value (FMV) of the in-kind donation, including in-kind service. A nonprofit organization may provide a “good faith estimate” if the donor is unable or unwilling to provide the FMV.
Here’s an example of an in-kind acknowledgement statement:
Thank you for your generous contribution of [item description] that [organization name] received on [date]. This generous gift will help further the mission of our organization. No goods or services were provided to you in exchange for this donation.
A statement as simple as this can be used for any type of in-kind donation. You should also include your tax ID number as part of your statement.
The importance of in-kind donations cannot be overstated. They can fill in the gap when an agency does not have the funds to purchase needed items and they can be sold to raise revenue. Help your donors support your organization by having a Wish List on your website. People want to help and sometimes an in-kind donor can grow into a sustaining donor.
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching, grant writing, and fundraising services for our nonprofit clients. We specialize in small to mid-size organizations because we understand your challenges. Please contact us for more information.