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In-Kind Donations: The Ultimate Guide 

13 min read
January 02, 2024
Allison Smith headshot
Allison Smith
Content Marketing Coordinator, Neon One
boxes of donated items

When it comes to fundraising, most people think of cold, hard cash—the literal act of raising financial funds to keep a nonprofit’s operations running. But in lieu of transferring funds, some supporters are in a position to give an in-kind donation of goods or services that can be equally beneficial to your organization’s mission.

Any organization can benefit from in-kind donations, no matter your size or mission type. Whether it be items your beneficiaries need or items that help your team fulfill your mission, your nonprofit will get some value out of this type of support if you take proper measures to get what you need.

Your donors may also prefer to make in-kind donations instead of (or alongside) financial support. They’re an effective way for donors to get involved at a low cost to them.

Let’s take a deep dive into in-kind donations for nonprofits. We’ll go into a lot of detail about many aspects of in-kind donations; if you ever want to skip around to a specific topic, just use these links:

What Are In-Kind Donations (and Should You Take Them)? 

Very broadly, in-kind donations are non-monetary contributions to your organization. This can range from donations of food and clothing to event space, legal services, and property and art. Unlike cash, not all in-kind donations are accepted by all nonprofits.

That’s because not all nonprofits have the resources to do so. Consider something like clothing drives that involve hundreds of donors bringing in bags of old clothes. That might be fine for a large organization with a staff of thousands to wash, categorize, price, and inventory these items. A smaller nonprofit without these resources would struggle to handle it. In the end, the in-kind donation may cost them more than it’s worth. 

That’s why all nonprofits should have a clear, established policy in place for accepting in-kind donations. It should include donation criteria, restrictions on what you accept, contact parties to handle the donation, and your organization’s policies for valuing the item. You’ll also want to set specific restrictions related to intangible versus tangible in-kind donations. 

What Kinds of In-Kind Donations Are There?

You may struggle to see how in-kind donations benefit your organization. There are a few types of in-kind donations, some of which your nonprofit may find more valuable than others.

  • Goods. These are tangible donations—they can be items for your constituents, such as clothing and toys, or goods for your nonprofit’s use, such as office equipment. Goods that are donated to be auctioned off at your next fundraising event are another example of this kind of gift.
  • Expertise. This would include volunteer and pro-bono work. With this kind of gift, people like attorneys, volunteer writers, and other experts are donating their time and expertise to your organization. This is especially helpful to understaffed nonprofits who are missing a critical role or skill set in their staff.
  • Cash Equivalents. Stocks, bonds, cryptocurrencies, and more! These financial gifts benefit your nonprofit over a long period of time and ensure you stay financially stable for years to come.

Here are some examples of each type of in-kind donation.

TangibleIntangible
Tangible in-kind donations are physical goods or products. It’s easier to value these items as they typically have a straightforward fair market value.

Examples include:
Clothing
Food
Furniture
Vehicles
Equipment
Medical supplies
Personal care items
School supplies
Toys and games
Pet supplies
Intangible in-kind donations are non-physical contributions. They can be harder to value as they include abstract components, like time or expertise. 

Examples include:
Professional services
Marketing
Consulting
Volunteering
Event space
Mentorships
Patent donations
Intellectual property licensing
Translation services

How to Accept In-Kind Donations

If you’ve decided to expand your donation options, it may be necessary to create a “ways to give” page. Although we still recommend a prominently displayed “donate now” button that takes visitors straight to your donation form, having a link to a “ways to give” page nearby is a great way to clarify all the ways donors can support your organization. This “ways to give” page created by International Neighbors of Charlottesville is an excellent example of what to do. On this page, they give detailed instructions on how you can further your contribution to International Neighbors of Charlottesville’s mission.

When it comes to donated goods, don’t be afraid to get specific with what you want and do not want. Get everyone in your nonprofit on the same page by creating a detailed gift acceptance policy. Note what items you will take, what you will not take, what condition they need to be in (new, gently used, etc.), and when and where they can drop off the items.

One way to prevent getting unwanted goods dropped at your nonprofit’s doors is by creating an Amazon Wish List. Considering how often people shop on Amazon, it could be more convenient for some of your donors to give this way. Plus, the delivery truck will do all the legwork getting the items to your office. 

A great example of a wish list system is the wishlist page by PAWS Chicago. On this page, PAWS gives information about what types of items they will and will not accept and where and when to drop them off. They also link out to their Amazon Wish List, which contains more specific items, and you can find more information about which items are the highest priority and how many of each piece the organization needs. 

By offering both wish list types, donors can give items they already have at home that meet the requirements, or they can choose to purchase these items elsewhere.

Fundraising for In-Kind Donations

Now that you have your ducks in a row, it’s time to spread the word and fundraise for in-kind donations! But how?

Here are three best practices for in-kind donations fundraising:

1. Identify Your Nonprofit’s Needs

Start by assessing your organization’s needs, goals, and priorities. Every type of in-kind donation won’t be useful for your cause or align with your mission, so it’s important to first outline which in-kind donations you should accept.

What type of in-kind donation would help your nonprofit carry out its mission? What type would be a waste of your storage space? Determine which in-kind donations match your organization’s needs and specifically ask for those (and ask not to receive the ones you can’t use!). You can also share your online wish list that features the in-kind donations you’re seeking.

2. Tap Into Your Current Network

One great way to start is by tapping your current network. Let it be known to your current donors, board members, and volunteers what items or skills your organization needs. Ask your staff to reach out to people they know. Chances are good that someone your organization knows has items you need at home or knows someone who would be willing to volunteer their expertise. 

Doing a standard promotion of your new “ways to give” page in your newsletter and on social media is another great place to start. Sending out a dedicated appeal for your in-kind donations will also help.

3. Build Partnerships

You can also take things to the private sector by asking corporate partners to make in-kind donations. By building a relationship with an office supply store, for example, you may get all the office supplies you need. If the local grocery store is willing to put out a box to collect for your toy drive, that’s great! More businesses may be willing to help you than you think.

For more tips on how to build corporate partnerships, check out this resource:

Methods for Valuing In-Kind Donations 

In-kind donations don’t (usually) come with a monetary value—you have to assess each of your gifts and assign one to them. There are a few different ways that organizations go about handling this, from simple self-reporting to detailed appraisals.

Self-Report

Self-reporting makes sense for a lot of the lower-value in-kind donations you receive. For example, it’s impractical to go through an entire bag of clothes that a donor gave to your organization and price each piece. Instead, the donor may estimate that the value is approximately $50. If it seems like a reasonable evaluation, the nonprofit takes the donor’s word for it. While this is the fastest way to manage in-kind valuations, it’s only appropriate in situations where the value is nominal. 

Fair Market Value

The fair market value is the price that an item would get on the open market. This is probably one of the most popular appraisal methods for nonprofits because the internet makes it very easy to look up comparable values of items. This method is most helpful for gifts like vehicles, stocks, furniture, or other significant donations.

Hourly Rate

The hourly rate approach can make it much easier to assess the value of intangible in-kind donations like professional services or consulting. The nonprofit can use the standard hourly rate for such a professional and then track the time they spend volunteering for the benefit of the organization.

Intended Use

An item that’s intended to be used by the nonprofit will typically have a value that’s higher than an item that’s going to be sold. For example, if a company donates a bunch of laptops, and the organization chooses to use them, they receive continued benefits from those laptops. They’d likely be more valuable than a donation of laptops the organization intends to sell. 

Appraisal

Donations that are particularly high value or rare should be professionally appraised by an expert in the field. Because they’re expensive, these are usually only used for donations of jewelry, art, real estate, or other major in-kind contributions. Insurance-related appraisals may also be used. 

Valuing your in-kind donations accurately is important because, even though they’re nonmonetary, you still have to provide a receipt for your donors. You’ll also want to be able to track the value of your in-kind donations in your donor database.

Receipting and Tracking In-Kind Donations for Nonprofits 

Receipting and tracking your in-kind donations is not as straightforward as monetary donations for an obvious reason—you have to establish the value yourself. While you can’t control that, there are some things you can control. Standardize a receipting process for all in-kind donations so you know exactly what information to collect regardless of what’s being donated.

What to Include on In-Kind Donation Receipts 

A receipt allows you to acknowledge the donation and provide important details your donor needs for their taxes. Here are the essential elements that your receipts should include:

  • Donor info: The donation receipt should include the donor’s name and address, as well as their tax identification number if applicable.
  • Description of the donation: Your receipt should describe the donated item or service in detail, including the quantity, brand, model number, or other identifying information. It’s helpful to include a brief note on the condition of the item, like identifying whether it’s used or new, to back up its valuation. 
  • Date of the donation: Include the date or date range if it is an ongoing in-kind donation. 
  • Value: You should include both the value and how you determined that value. If you’re using the fair market value, for example, note that’s what the estimate was based on. This will be helpful if there are questions later.
  • Intended use: The receipt should indicate whether the donated item or service is intended for use by the nonprofit or if it will be sold or exchanged.
  • Acknowledgment: You’ll want to send a separate thank-you notification, but you can also include an acknowledgment within your receipt. 
  • Tax-exempt statement: Your receipt should include a statement that the nonprofit is a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code and suggest the donor consult their tax advisor for information regarding the tax-deductible nature of their contribution.

These elements will provide the information your donor needs to claim tax benefits from donations. It also categorizes the data to track these donations effectively in your nonprofit database. 

Tax Acknowledgement and Receipting

In order to start offering more ways to give to your organization, you need to know the legal requirements. In order for a donor to claim $250 worth of donated goods, a nonprofit must send donors a written acknowledgment of the donation, if any goods or services were given in exchange for the donation. For monetary donations and cash equivalents, you must send a receipt of the amount they’ve donated. 

Learn more about the law here.

Tracking In-Kind Donations in Your Database 

Tracking in-kind donations provides clarity on the resources available to your organization. It can also help you build relationships as you use the data you gain to understand your donors. If you are using a CRM, this is a relatively easy process. All you need to do is include a field that allows you to track this type of donation in each donor’s profile or record. Then, you can segment out those donor accounts in several different ways to understand the effect of in-kind donations on your organization.

Donors Who Give In KindIn-Kind Gifts by Campaign
You should create a segment specifically for the names and contact information of donors who give in-kind donations. This helps you personalize your thank-you messages to them by using the details of their donation in the in-kind donor thank-you letter templateTracking the value of in-kind donations by campaign or fundraising initiative allows you to assess those efforts’ effectiveness and identify areas for improvement. Through this, you can also estimate your campaign’s overall ROI by comparing the value of the in-kind campaign to the administrative cost around it. 
Overall ValueIn-Kind Gift Type (Tangible vs. Intangible)
Tracking the value of your overall in-kind donations tells you how important they are to your organization. While most will receive the majority of their donations in cash, inventory-heavy nonprofits like museums or private libraries may have higher in-kind receipts than anything else. Tracking and comparing both tangible and intangible donations helps nonprofits understand the type of support they are receiving from donors. It can also help you identify areas where you may need additional resources.

When you segment your donor data on in-kind donations, you can get a true assessment of the value of these contributions. You can also use the details tracked to better manage your resources, provide accurate financial reporting, and build strong relationships with your donors.

Track In-Kind Donations with a Powerful Nonprofit CRM

Tracking in-kind donations for nonprofits can be a challenge because their value is often very subjective. The best way to tackle this is through standardization. If you put a process in place for the way you value and document tangible and intangible donations, you can use your CRM to handle the rest. This will help you create closer connections with in-kind donors while gaining insight into your financial position. 

Neon CRM is an excellent solution for tracking in-kind donations for nonprofits, which includes the ability to create custom fields for tracking specific types. To learn more, request a demo!

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