In-Kind Donations 101: A Guide to In-Kind Donations
Ever heard of an in-kind donation? Have excess items laying around that you no longer use? Looking for a way to help others in need? This guide to in-kind donations will provide you with what you need to know and how they can make a big impact for non-profits.
Part 1: What are in-kind donations
An in-kind donation is when needed goods or services are given to a non-profit. In-kind donations are non-monetary items that will be used directly in an organization’s programs or used by their staff.
- household items
- office supplies
- pet toys
- medical supplies
- accounting help
- legal advice
These are just a few examples – the list could go on! But hopefully this gives you an idea of what is possible when making an in-kind donation.
Where do in-kind donations come from?
In-kind donations can come from individuals, small businesses and larger corporations. Individuals will often donate excess items around their house while businesses and corporations will mostly donate the products that they produce or the services that they offer. In-kind donations are also making up a larger part of the overall giving from companies.
Part 2: How non-profits benefit from in-kind donations
Non-profits Receive Needed Goods
Non-profits have items that are needed to successfully operate and also that are needed by the individuals they serve. These can include office furniture and computers for an organization’s staff, toys for a child or a refrigerator for a client that is moving into their own apartment. By receiving in-kind donations, non-profits are able to help more people and increase their impact and efficiency.
When non-profits receive in-kind donations of items and services that they otherwise would have had to pay for it results in direct cost savings and allows more of their income to go towards other needs. By receiving a donation of computers, a non-profit could easily save thousands of dollars that can now be spent elsewhere within the organization. Non-profits are also able to acquire items that might have been out of their budget. A non-profit may never have been able to afford a conference table but by receiving a donated one they are able to have one without purchasing it.
Connecting with Donors
Non-profits also benefit from in-kind donations because they are often introduced to new donors that are supporting their organization. This allows the non-profit to develop a relationship with the donor that could lead to further support in the future. A donor that gives their items to a non-profit becomes familiar with the organization and gains an understanding of how they use donations to further their mission. Donors may then be more willing to further engage with and support the organization in various ways by volunteering, telling people they know about the organization or support the organization by making a donation.
Part 3: How donors benefit from in-kind donations
In-kind donations benefit individual donors in a few ways that include:
- an alternative way for them to donate
- a way to recycle their goods
- the ability to receive a tax write off
Donors may not have the ability to donate money to a non-profit but can easily donate something they aren’t using anymore. A donated good can make a significant impact at a non-profit, as they might not have been able to purchase that item themselves. By donating goods to a non-profit, donors are able to recycle their items and have it be used directly by someone in need of that item. By donating to a non-profit instead of throwing an item out or recycling, the donation can be reused for its original purpose so it has the maximum effect and impact. Donating unused goods can also clear up space for the donor and help them clean their home. In-kind donors can receive a tax receipt for their donations when donating to a registered non-profit that is tax exempt. The donor is responsible for providing a fair market value for the in-kind donation, which will be used on the tax receipt provided by the non-profit. One important thing to know is that the value of donated time and services cannot be deducted. Non-profits aren’t allowed to provide a donor with the value of their donation. The important things for a donor to know in order to receive a tax receipt are:
- A donation must be money or physical property. A donation of services or time does not qualify.
- The donation value is based on “Fair Market Value”
- A donation must go to a tax exempt non-profit organization and can’t be given to an individual.
The IRS has published a helpful guide on claiming tax deductions from charitable contributions.
In-kind donations can also benefit companies as well. Companies often have excess inventory that they need to remove because it can no longer be sold at the original price. Instead of reselling the inventory at a fraction of the original selling price through liquidation, companies could see a greater financial gain through donating and receiving a tax deduction. Companies are able to reduce their storage costs, and clear valuable warehouse space. Donating Companies can also benefit from donating their inventory because they are becoming more socially responsible. This increases their brand image and could attract more consumers to purchase their products and attract better employees.
Part 4: How donors and non-profits can take advantage of in-kind donations
Donors and non-profits can take advantage of in-kind donations in the following ways:
- donate items
- list and ask for in-kind donations
Individuals can easily find unused goods that they can donate to local non-profits with needs for those items.According to an eBay survey the average U.S. household has 52 unused items around the house. These can include clothing, electronics, computers, sporting goods, toys and furniture. But in-kind donations aren’t just limited to those types of items. They can also include office supplies, silent auction items, pet supplies, tools and many others types of items. People can also help by donating their time and expertise in a certain area such as legal counseling, tax advice, handiwork or something else. Companies can consider the benefits of donating their excess inventory and develop an in-kind donation program. For donors the important thing is to make sure a non-profit is in need of your donation. You can often find what a non-profit is in need of by visiting their website and getting in touch with them. Donors can also make use of donation intermediaries, which can help with finding a non-profit that is in need of the donation and potentially with logistics in getting the donations to the non-profit.
non-profits can make the community aware of their in-kind needs. Often donors aren’t aware that non-profits are in need of things and what their specific needs are. If donors know about the in-kind needs of non-profits they can look to see if they have the items or if they know someone who might have the items. Often times non-profits will make a wish list on their website of current in-kind donation needs or ones that are needed an ongoing basis. non-profits can also use donation intermediaries to be connected to donations in a more efficient and easier way.
In-kind donations can have a substantial impact for non-profits. Whether it’s a new conference room table to facilitate meetings, a computer to help a teen do their homework or receiving legal advice to incorporate as a registered 501(c)(3).