In nature, mutualism is a symbiotic relationship between two species, in which both organisms benefit. In the fundraising industry, in-kind donations are a form of mutualism between individuals, businesses, or corporations AND your nonprofit. So what is an in-kind donation, and how can your org AND your donors benefit from it?
What is an in-kind donation?
An in-kind donation is a non-monetary gift of a product or service to a nonprofit from an individual, a business, or a corporation. It can be tangible – clothing, books, bicycles – or intangible – yard work, massage services, pro bono legal work (without charge). In-kind donations help you provide goods and services that would otherwise be prohibitively expensive. Plus they can free up your budget for the stuff that you have to spend money on – like compensating your hardworking employees!
What should you ask for?
First, think of what you need. Look at your budget. What do you spend a lot of money on, that might be mitigated through an in-kind contribution? Can you save money on administrative costs, if you receive an in-kind donation from an office supply store? Businesses often get their goods at cost – at much lower prices than you’d find on store shelves – so it won’t cost them as much as it’ll benefit you.
What types of companies give in-kind donations?
The important thing is to do some research on the companies before you make your request. Peruse their websites to see what organizations or causes they’ve donated to in the past. And lean on the fine folks you work with! Maybe some of your staff or board members have connections with local businesses. Don’t you often hear nonprofit leaders say something along these lines: “Oh, I have a friend who works at Corporation, so they donated 100 of these awesome widgets.” Use your connections, and start with your in-house ones when seeking in-kind donations.
Whom should you ask for an in-kind contribution?
Once you’ve decided what sort of in-kind donation will benefit you and your budget the most, it’s time to start asking around. Start with your board members, staff and volunteers. Tell them what you need and how you would use it and what part of your budget it would remove some of the burden from. Once you’ve asked the folks closest to you, reach out to the community at large. But be specific in what you’re asking for, or you just might end up with something you don’t want, can’t use or – worst of all – something that costs you time, money, AND resources!
What could possibly go wrong?
You’d NEVER turn down a donation – but maybe you should! Of course, no one in the nonprofit sector likes to turn down or discourage generosity. But sadly, sometimes donations DO cause more trouble than they’re worth. For example, a donation of a car that you’re going to have to put a lot of money into before it runs. (Unless, of course, you have a mechanic willing to provide you another in-kind donation and fix it up for free. Good luck with that.)
Another example would be perishable food that you have no place to store. A donation of an old piano that you’d have to spend money to tune and transport could cause headaches. You never want to discourage donations, unless they’re more trouble than they’re worth. If that’s the case, you’ll need to figure out how to tactfully explain why the gift isn’t suitable, without offending your generous donor. If you haven’t already, come up with a process for accepting and/or declining donations. Honesty and directness are your best policies here. Tactfully explain exactly why you’re unable to accept the gift. Your well-intentioned donor may not have thought about the practicalities and/or logistics of what they’re offering. If they see it from your perspective, they should understand.
How should you acknowledge it?
Your thank-you letter for an in-kind donation should include a description of the item, the date it was received, and your tax ID number. Don’t assign a value to it – that’s on the donor when they write it off. But speaking of value, in-kind donations ARE considered revenue, so keep that in mind when you’re doing your books. You need to be mindful of the fair market value of the donation – that’s the money you’d shell out if you were actually paying for the item or the service.
Once you know whom you’ll ask, how will you ask?
In much the same way you’d ask for any other donation. Compose an in-kind donation letter template that you can modify a bit, depending on whom you’re sending it to. It’s going to look a bit like your typical donation request letter, with some tweaks. You’ll include mission speak, but you’ll refrain from celebrating past accomplishments. But do mention mutualism! Remember, it’s that symbiotic relationship between you and your donor, created by the in-kind donation. Remind them how their donation will benefit them as well as you.
In-kind donation letter template
Dear [Donor Name],
[Tell them what you need.]
[Tell them what you do.]
[Tell them what they do and why they might consider helping you out.]
[Tell them the benefit to them.]
Sample In-Kind Donation Letter
Dear Donor Name,
My name is (Your Name) and I’m writing to request an in-kind donation of (whatever you need).
We here at (Nonprofit) are committed to (doing whatever it is you do).
As a member of the business community, you (help people, places, animals do whatever.)
We’ll gratefully acknowledge you in our newsletter and give you a shout-out on our social media channels, which boast [number of] followers.
I’ll follow up with you next week. Thank you for your consideration.
What’s not to love about in-kind donations? They’re a true win-win. They’re good for your organization and they’re good for the generous donors who provide them. Now that you know pretty much all you need to know about in-kind contributions – the various types of them, how to ask for them, how to acknowledge them, and how they can help you grow – go out and procure some. Reach out! We love to help.