In-Kind Donations: Your All-Inclusive Guide

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 exactly 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 (without charge) legal work. 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 hardworking staff and keeping the lights on!

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 could be mitigated through an in-kind contribution? Can you save money on office 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.

Who gives in-kind donations?

Find a corporation to give some stuff to you! Easy as that, right? Great, but you’re not the first person, or probably even the 100th person – to ask. Competition is fierce among nonprofits seeking in-kind donations from corporations. So vet your requests carefully to save yourself time. Make a list of potential donors whose goods and services align with your mission. For example, if your nonprofit runs after-school sports programs, reach out to sporting goods stores. If your org exposes kids to music, call around to music stores and see if you can secure some musical instruments, or free/discounted lessons. Ditto with art, art supplies and/or art lessons. The important thing is to do some research on the companies before you make your request. Peruse their websites and online publications 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.

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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. Begin with your committee, 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 must determine 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. Transparency. 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’re likely to understand and not feel offended.

How should you acknowledge it?

Your t hank-you letter for an in-kind donation should include a description of the item, the date it was received, and your tax ID number. No need to assign a value to it – that’s on the donor when they write it off their taxes. 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.

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Who 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. 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.