What if we told you that $4.1 billion worth of support flows to nonprofits each year without a single check being written? These are in-kind donations – contributions of goods and services instead of cash that keep organizations running and missions thriving.Here's something that might surprise you: 81% of donors give to nonprofits through in-kind donations. Whether someone donates office supplies to keep your operations smooth, a lawyer provides pro bono legal services, or a local business offers event space, these non-monetary gifts often become the backbone of nonprofit work. They provide exactly what you need without draining your already tight budget.
In-kind donations solve a problem every nonprofit knows well – stretching limited dollars to cover endless needs. When a donor contributes the printer paper you need or volunteers their marketing expertise, you can redirect precious funds to your core programs. These gifts give you access to resources that might otherwise be completely out of reach.
This guide walks you through everything you need to know about in-kind contributions. You'll discover what counts as an in-kind donation, see real examples from other nonprofits, and learn practical strategies for managing these valuable gifts without the headaches.
The IRS keeps things straightforward when it comes to in-kind donations. They're non-monetary contributions that come in various forms. When a local business offers you free meeting space or a graphic designer creates your newsletter pro bono, that's an in-kind gift helping you fulfill your mission without spending cash.
Any non-monetary contribution provided to your nonprofit free of charge or at significantly reduced rates can qualify as an in-kind donation. These contributions fall into several main categories:
Goods: Tangible items like computers, food, clothing, medical supplies, auction items, and office equipment
Services: Professional assistance such as legal counsel, accounting, web design, or consulting provided pro-bono
Expertise: Specialized knowledge sharing through workshops, training, or consulting
Use of facilities: Free or discounted event space, meeting rooms, or office accommodations
Volunteer time: Specialized professional skills offered freely to your organization
For a contribution to qualify as an in-kind donation, it should benefit your nonprofit directly or support your exempt purposes. Many in-kind donations are tax-deductible if they’re given to a qualified charitable organization. In some cases, businesses that donate inventory to programs serving the ill, needy, or infants may qualify for an enhanced tax deduction under U.S. law. Please consult your tax advisor for guidance on your specific situation.
Major companies run established programs that provide substantial in-kind support to nonprofits.
Cisco donates technology to qualifying nonprofits, helping them "realize significant gains in productivity, security, scalability, and cost efficiency". Google takes a different approach, offering eligible organizations up to $10,000 per month in free Google Ads through their Ad Grants program.
Target supports nonprofits through gift cards that help organizations acquire essential supplies, clothing, and food. Johnson & Johnson focuses on health-related contributions, donating medical supplies including first aid kits and healthcare essentials to nonprofits addressing health and wellness needs.
Smaller-scale examples pack just as much punch. Local electricians offering free rewiring services (valued at $2,400), sign companies donating new signage (retail value $5,500), and furniture stores contributing couches worth $3,000. These practical donations show how in-kind gifts provide value that far exceeds what most nonprofits could afford through direct purchases.
In-kind donations address a fundamental challenge every nonprofit faces – making limited resources stretch further. They directly cover essential expenses that would otherwise drain your cash reserves, creating the financial flexibility you need to fund core programs.
The popularity of this giving method continues to grow, with 81% of donors choosing to give to nonprofits through in-kind donations. This trend opens doors to new donor segments, particularly supporters who want to contribute meaningfully but may not have available cash.
Some organizations built their entire operational model around in-kind donations. Food banks, clothing drives, and thrift stores depend on these contributions. Organizations like Goodwill, Salvation Army, and Habitat for Humanity ReStore source their inventory directly from donated goods.
There's an environmental angle here too. In-kind donations support sustainable practices by reducing waste – when donors contribute surplus goods, valuable items avoid landfills while reaching people who need them. This approach resonates with environmentally conscious donors and supports broader social responsibility goals.
"Money is not the only commodity that is fun to give. We can give time, we can give our expertise, we can give our love, or simply give a smile." — Steve Goodier, Author and motivational speaker, known for insights on generosity and giving
In-kind contributions show up in more ways than you might expect. Understanding these different types helps you recognize opportunities and manage the various resources that supporters might offer. Let's break down the main categories of in-kind gifts that can make a real difference for your organization.
Tangible goods represent the bread and butter of in-kind donations. These physical items either keep your operations running or directly serve the people you help. Most tangible donations fall into two clear categories:
Beneficiary distribution includes food for pantries, clothing for shelters, or medical supplies for clinics. Operational support covers the behind-the-scenes essentials like office equipment, computers, furniture, or vehicles that help you do your work.
Some nonprofits get creative with tangible goods for fundraising purposes – think auction items or raffle prizes. These donations create additional revenue streams without requiring any upfront investment. Other common tangible gifts include:
Technology and electronic equipment
Building materials and construction supplies
Toys, games, and educational materials
Personal care items and hygiene products
Professional services pack serious value into in-kind contributions. When individuals or businesses donate their expertise instead of charging usual fees, your nonprofit gains access to skills that might otherwise be completely unaffordable. The services nonprofits receive most often include:
Legal representation and counsel
Accounting and bookkeeping assistance
IT support and technology implementation
Graphic design and marketing services
Web development and digital presence enhancement
Picture this: an electrician volunteers to install new equipment or an attorney provides pro bono legal advice. Both deliver substantial value that would typically require major budget allocations. Professional services often come from people with specialized licenses or certifications, giving your organization access to top-tier expertise without the hefty price tag.
Space donations solve one of the biggest expense challenges nonprofits face. These contributions provide essential physical environments for your daily operations, special events, or ongoing programs. Common space donations include:
Free or reduced-cost office space for daily operations
Event venues for fundraisers or programs
Meeting rooms for board gatherings
Storage facilities for inventory or supplies
Property owners win too when they donate unused commercial storefronts or facilities. They support community causes, potentially reduce taxable income, and put empty real estate to good use. For smaller nonprofits especially, receiving donated space eliminates what often represents their largest monthly expense.
Here's where things get a bit tricky. General volunteer hours don't technically count as in-kind donations for tax purposes, but specialized professional skills offered voluntarily often do qualify. The key distinction comes down to whether:
The volunteer provides professional expertise they normally charge for
Your organization would have purchased these services if not donated
When a lawyer volunteers legal services or a CPA offers accounting assistance, their professional time can be valued at standard hourly rates and recorded as an in-kind contribution. But if that same lawyer helps with general office work or event setup, those hours wouldn't qualify as in-kind services.
Many nonprofits track all volunteer hours anyway. Why? They demonstrate community support and sometimes qualify as matching contributions for grants. Keep in mind that volunteers can't deduct the value of their donated time on tax returns, but your organization can recognize this contribution in your financial records.
Every nonprofit considering in-kind donations faces the same question: are these non-monetary gifts worth the effort? The answer isn't simple. While these contributions can be a lifeline for your organization, they also come with unique challenges that cash donations don't present.
The financial impact of in-kind donations can be game-changing. These contributions provide significant cost savings by covering expenses you'd otherwise pay for directly. When a local tech company donates computers or an accounting firm provides pro bono bookkeeping, you can redirect those budget dollars to your core programs.
In-kind gifts deliver three major advantages:
Direct expense coverage: They handle essential costs without touching your cash reserves, freeing up funds for mission-critical work.
Greater financial flexibility: Accepting items you'd normally purchase lets you move money to other pressing needs.
Access to expertise: Pro bono services give you professional support that might otherwise be completely out of reach.
There's also the environmental angle. In-kind donations support sustainability by keeping usable goods out of landfills. As one expert puts it, "Why? Because donating in-kind is good for the planet, good for the bottom line, and good from a public relations perspective".
These gifts also strengthen donor relationships in ways cash can't. When someone contributes their time, expertise, or carefully chosen items, they become more invested in your success.
Here's the reality nobody talks about enough: not every donated item actually helps your mission. You might receive expired food, broken electronics, or items that simply don't fit your needs. Without clear guidelines, these well-meaning gifts can create more work than benefit.
The logistics alone can be overwhelming:
Space considerations: Physical donations need somewhere to live, which becomes a problem fast if storage is tight.
Personnel demands: Someone has to sort, organize, and distribute these items – and that takes real time and effort.
Transportation challenges: Getting donated goods from point A to point B requires vehicles, coordination, and often multiple trips.
Then there's the bookkeeping headache. Determining fair market value for donated items isn't straightforward like writing down a check amount. "Valuing in-kind donations is an essential step for nonprofits, and it can be a bit trickier than with cash-based donations".
The key is having systems in place before you start accepting these gifts. Clear policies help you capture the benefits while avoiding the common pitfalls that can turn generous donations into organizational burdens.
"Giving is not just about making a donation. It is about making a difference." — Kathy Calvin, Former President and CEO, United Nations Foundation
Smart systems make the difference between helpful donations and storage headaches. Without clear processes, you might find yourself overwhelmed by items you can't use while missing opportunities for gifts that could really help your mission.
A gift acceptance policy becomes your best friend when handling in-kind donations. This written document spells out exactly what your organization can and cannot accept, plus when you might make exceptions. Think of it as your roadmap for saying "yes" to the right donations and "no" to the wrong ones without hurt feelings.
Your policy should cover:
Specific goods, services, and expertise your organization needs
Condition requirements (new vs. gently used items)
Items your organization cannot use and will refuse
Who has authority to review and accept questionable donations
This policy helps everyone on your team handle donations the same way. More importantly, it takes the personal sting out of declining inappropriate gifts.
Wishlist creation turns random donations into targeted support. When you clearly communicate what you need, donors can contribute items that actually help your mission.
Share your wishlist on your website, through social media, or on specialized platforms like DreamList that show exactly what each program needs. This approach ensures donations align with both your needs and your gift acceptance policy.
Significant donations need paperwork. Written agreements outline the terms between your organization and the donor, covering value, purpose, and expectations.
These documents become especially important for donated materials like software, music, or creative works where intellectual property rights matter. Have your legal counsel review all such agreements before signing.
Sometimes the kindest thing you can do is say no. When declining gifts:
Thank donors genuinely for their generosity
Apologize sincerely about declining
Explain clearly why you cannot accept their gift
Help them find other organizations that might need their donation
Your gift acceptance policy gives you a graceful way to refuse inappropriate donations without seeming ungrateful.
Getting the paperwork right matters more than you might think. Proper tracking and valuation of in-kind gifts protects both your organization and your donors, ensuring everyone gets the recognition and tax benefits they deserve.
Fair market value (FMV) sounds complicated, but it's really just what someone would pay for an item in a normal sale between willing buyers and sellers. Here's how to figure it out for different types of donations:
Products/Goods: Check retail prices from major retailers or research comparable values online
Professional Services: Use the provider's standard hourly rate multiplied by hours contributed
Real Estate/Facilities: Compare to similar local market properties or rental rates
The key is staying consistent. As one source notes, "set a standard for obtaining fair market value for a type of good or service and be consistent in how you use and track that value". Pick your method and stick with it.
GAAP accounting rules are pretty straightforward here. Record in-kind donations as revenue as soon as the donor provides the contribution to your organization. You'll need to report donated items or services as revenue in your statement of activities on the date the contribution becomes known, regardless of when you actually receive it.
Here's the bookkeeping part: record the fair market value as both revenue and an expense or asset. This dual entry won't change your net income, but it gives you an accurate picture of your total organizational activity.
The IRS has specific documentation requirements that you'll want to follow carefully. For donations valued above $250, donors must obtain written acknowledgments from your organization. Donations exceeding $500 require donors to complete Form 8283, while those above $5,000 need qualified appraisals.
Something important to remember: donated services generally aren't tax-deductible for donors unless they're providing unreimbursed expenses related to the service. However, specialized professional services can be valued and recorded by your organization.
Your acknowledgment letters should include these essentials:
Organization name
Description of donated item/service (without assigning value)
Statement about whether goods/services were provided in exchange
Date of receipt
One crucial rule: never determine the value of non-cash gifts for donors' tax purposes. Your receipt should describe the donation without stating its dollar value unless you have third-party documentation. Let the donors work with their tax advisors on valuation.
In-kind donations represent one of the most underutilized opportunities in nonprofit fundraising. When you consider that $4.1 billion annually flows to organizations through goods and services rather than checks, it's clear these contributions deserve serious attention in your resource development strategy.
The key to success lies in treating in-kind gifts as strategically as you would any major donor relationship. Clear policies keep you from drowning in unusable items. Specific wishlists guide supporters toward contributing what you actually need. Proper documentation protects both your organization and your donors.
Yes, managing these contributions takes effort. You'll need systems for tracking, valuation, and acknowledgment. But the payoff is significant – access to resources that would otherwise strain your budget, deeper connections with supporters, and the flexibility to redirect cash to your core mission work.
The fact that 81% of donors choose to give through in-kind contributions tells us something important: people want to help in ways that feel meaningful and tangible to them. When you make it easy for them to contribute goods and services, you're opening doors to supporters who might never write a check but will gladly share their expertise or donate supplies.
Start small if this feels overwhelming. Pick one category – maybe office supplies or professional services – and develop clear guidelines for accepting those gifts. Create a simple wishlist and share it with your current supporters. As you build confidence and systems, you can expand to handle larger contributions.
Your organization already has everything it needs to benefit from in-kind donations. The tools and strategies in this guide simply help you do it more effectively, turning potential headaches into genuine assets for your mission.
In-kind donations—non-cash contributions of goods, services, or expertise—represent a $4.1 billion annual opportunity for nonprofits to maximize impact while conserving financial resources.
• Establish clear gift acceptance policies to avoid storage issues and unusable donations while guiding consistent decision-making across your organization.
• Create targeted wishlists to direct donors toward items you actually need, ensuring contributions align with your mission and operational requirements.
• Value donations at fair market value using consistent methods—retail prices for goods, standard rates for professional services, and market comparisons for facilities.
• Document everything properly with written acknowledgments for donations over $250, avoiding assigning dollar values that only qualified appraisers should determine.
• Record in-kind gifts as both revenue and expenses immediately upon receipt to maintain accurate financial reporting under GAAP requirements.
With 81% of donors contributing through in-kind donations, developing robust systems for soliciting, accepting, and managing these gifts can significantly enhance your fundraising strategy while providing resources that often deliver impact far exceeding their dollar value.
An in-kind donation is any non-monetary contribution provided to a nonprofit free of charge or at significantly reduced rates. This can include goods like computers or food, services such as legal counsel or web design, use of facilities, and specialized volunteer time or expertise.
Nonprofits should determine the fair market value (FMV) of in-kind donations. For goods, use retail prices from high-volume retailers. Professional services should be valued based on the provider's standard hourly rate. For real estate or facilities, compare to similar local market properties or rental rates.
Yes, in-kind donations can be tax-deductible for donors. However, for donations valued above $250, donors must obtain written acknowledgments from the nonprofit. Donations exceeding $500 require donors to complete IRS Form 8283, while those above $5,000 need qualified appraisals.
Best practices include setting clear guidelines with a gift acceptance policy, creating a public wishlist to guide donors, using formal agreements for large or ongoing gifts, and avoiding acceptance of items that don't serve the organization's mission.
Under Generally Accepted Accounting Principles (GAAP), in-kind donations should be recorded as revenue as soon as the contribution is received. The fair market value should be recorded as both revenue and an expense or asset, accurately reflecting the organization's total activity without affecting net income.
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