In-kind donations refer to products or services donated directly to a nonprofit organization. These are tangible gifts given to your organization. Some nonprofits dislike in-kind donations because they feel it limits their flexibility to find the exact items they need. They don’t want to turn away gifts, but when the gifts aren’t appropriate, it’s hard to get excited about an in-kind offering.
Instead of fearing in-kind gifts or shunning them, how about embracing them? With so many news stories today about operating budgets misused at both for-profit and nonprofit organizations, many people prefer to give in-kind than to give cash donations. Figure out how to leverage in-kind donations rather than avoid them, and you’ll be able to meet your organization’s goals while making people feel good about their contribution.
Be Specific About Your Needs
The first step to run an in-kind donation event is to identify what you need. Be very specific about the items, too. Don’t be afraid to create and publicize a list with brands, sizes, colors, and specifics about the gifts needed.
A local animal shelter runs two in-kind gift events each year. They provide lists of items that can be purchased inexpensively at discount stores that will be used at the shelter.
Some items, such as bleach, mops, sponges, and pails, are listed as generic items. But they also list brands of cat litter, dog and puppy food, and cat and kitten food that they prefer. Although they won’t turn away gifts of other kinds of pet food, these specific brands are used when veterinarians prescribe specials diets to animals that have been abused. By stating this in their flyer, the shelter gently educates the public, asks clearly for what they need, and receives plenty of donations. They stage in-kind events in the spring at the YMCA and, in the fall, at the local car dealership and hotel chain. Special “meet and greet” days featuring adoptable pets and volunteers give the events a personal feeling.
Best of all, because the events are for a nonprofit, the local radio station loves to cover them, giving both the nonprofit and their sponsoring organizations a lot of free publicity. It’s a great way to stage an in-kind event that helps the shelter, generates publicity, and raises awareness of the local charity.
You don’t have to think small when it comes to in-kind gifts, either. You can list large items such as vehicles, office furniture, and computers as part of an in-kind gift strategy. Using the animal shelter example, be specific about your needs. If you do receive items that aren’t on the list, see if you can use them. If you can’t, thank the donor anyway, and find a way to dispose of them.
Establish Accounting Policies
Don’t forget to establish accounting policies around in-kind donations. You must account for in-kind contributions; they aren’t freebies. Donations above $250 must be recognized with a receipt but giving a receipt with the appropriate and necessary information for the donor’s tax records is appreciated.
An accounting policy for in-kind donations should include guidelines to ensure that all donations are:
- Documented with a receipt, and a copy of the receipt kept on file
- Evaluated and given an appropriate dollar value
- Treated consistently
- Verified in the accounting records
The IRS features a resource center called Tax Information for Contributors which includes many useful documents to guide you as you track contributions.
When your nonprofit has many needs, it can be difficult to think beyond an immediate cash influx via donations. Sometimes, however, people want to give tangible goods. An in-kind campaign helps you achieve your nonprofit goals while encouraging the public to support your organization.
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.