The Scoop On In-Kind Donations

Raising nonprofit funds is a full-time job. Between emails, texts, P2P campaigns, events, and trying to optimize your donation form, you might find it hard to think outside of the need-money-for-my-nonprofit-to-grow box. But allow us to shine a light on a quiet hero of nonprofits: in-kind gifts.

In-kind nonprofit donations are pretty much anything other than money. What type of in-kind donations your nonprofit needs depends on what you do. This article explores the different sources and types of in-kind donations in case there’s one you haven’t yet considered.

Types of In-Kind Donations 

Nonprofit donations can come in all shapes and sizes, but in-kind donations are grouped into four general types.  

• Tangible in-kind donations are things. They can include snack bags for your food pantry, hygiene products for your shelter, or toys for kids in your care. It can include any kind of supplies that support your mission, up to and including office space, cars, or other heavy equipment.
• Intangible donations include abstract items like intellectual property, securities, or patents.
• Time or services can include volunteers, consulting, transportation, legal services, free media, or creative services and website design and development.
• Real estate would most likely be the gift of an office space, warehouse, land, or something similar.

When we talk about in-kind donations, we always remind our clients of this note: if you want to, or have to, claim in-kind gifts on your financial statements, Generally Accepted Accounting Principles (GAAP) say they can be recognized under two conditions:

• The services create or enhance non-financial assets
• The services require specialized skills, are provided by people possessing those skills, and your nonprofit would have to purchase the services if they weren’t donated.

So if your food pantry gets donated lumber to build more shelves to hold donated food, or a graphic designer friend updates your logo, or a legal friend writes up a contract for you…those are all in-kind donations.

Benefits of In-Kind Donations

In-kind donations are a two-way street. You benefit because you get something you need to help your nonprofit succeed, and it’s usually something you’d have to pay for (and spend time on) if it wasn’t given to you for free. It can also offer validation to your nonprofit within the community and spread the word about your mission.

The individual, corporation, or business donating gets publicity, the public goodwill of supporting a charity, and the chance to give back to a community.

In-kind donations are:

• A cost-effective way to get needed supplies and services for free
• An opportunity for a company or donor to have a great impact on your mission
• A way to strengthen the bond a donor feels with your nonprofit
• An easy way to diversify income streams and provide support, even in an economic downturn

Use in-kind donations for fundraising prizes in raffles or swag bags at a silent auction. Use them for legal or administrative help. And when you need a big ticket item, consider in-kind gifts as an avenue to be gifted a car, office space, a warehouse, or supplies to build or improve your offices.

Be on the lookout for companies that might have unsold inventory, like a grocery store, or a company that specializes in what you need, like a tax service.

What if You Get In-Kind Donations You Don’t Want?

Or can’t use? A crate full of books won’t really help a food bank, even though the neighborhood bookstore meant well when they decided to donate unsellable books rather than tossing them in the trash.

We recommend that our clients take the time to draft a gift acceptance policy. The National Council of Nonprofits offers a compelling list of reasons they’re important:

• Some types of gifts may run counter to your nonprofit’s values
• Certain gifts can have tax implications, such as property taxes or licensing
• Your nonprofit might be unable to use or dispose of a gift (they give the example of a racehorse!)
• A gift acceptance policy can help your nonprofit manage risk and safeguard donor relationships
• IRS Form 990 dictates that nonprofits must answer “yes” when asked if they have a gift acceptance policy to complete Schedule M, where you would list noncash contributions

So clearly, it’s a good idea! But what should your policy include?

Creating a Gift Acceptance Policy

As with any policy, this can be as simple or as complicated as you wish. There are four significant parts you’ll want to include at a minimum: 

1. State that your nonprofit solicits and accepts gifts consistent with its mission.
2. Indicate that donations will generally be accepted from individuals, corporations, partnerships, foundations, government agencies, or other entities without limitation.
3. In the course of fundraising, your nonprofit will accept donations of (money, property, stock, in-kind goods, etc.).
4. Certain types of gifts may be reviewed before acceptance due to potential liabilities they may post. Examples of gifts that will be subject to review include gifts of real property, gifts of personal property, and gifts of securities.

Those points should cover the bases, or you can review more samples offered by the Nonprofit Risk Management Center.

Start Small and Ask Local

If you ask Johnson & Johnson to donate medical supplies, you’re going to have a lot of competition. But if you ask your local pharmacy for a supply of bandaids, you might have better luck. Here are five strategies you can use:

1. Start small and ask local! Start with businesses and restaurants in your community.
2. Investigate online platforms that connect nonprofits with companies or individuals willing to donate goods and services. GlobalGiving is one example.
3. Host a donation drive and specify what you’re collecting.
4. Talk to other nonprofits and see if they have donated gifts they aren’t using.
5. Mine your donor pool! Ask existing donors if they have specific supplies or services that will benefit your nonprofit.

Have we convinced you that in-kind donations are a great resource for your nonprofit? The next time your team gets together, brainstorm a list of goods and services that would help your nonprofit. Then prioritize the list and decide on an outreach plan. 

In-kind donations are an important arm of any nonprofit fundraising. They can save you time and money, build stronger relationships, and diversify your revenue streams. In-kind donations are most definitely worth careful consideration!