Many nonprofit organizations receive goods or services as contributions, in addition to cash. These non-cash contributions are referred to as gifts in-kind. Going after in-kind donations is a lot like going after cash—it’s just more fun! Whether your group is planning an event, equipping an office, or completing a project, you should not overlook the importance of an in-kind strategy.

TYPES OF IN KIND DONATIONS The sky’s the limit on the kinds of in-kind donations that you can obtain for your organization! Here are some of the most common categories to get your mind buzzing! Office Space. Outside of salaries, office space probably represents the largest cost most organizations have to cover. It is worth exploring the possibilities for obtaining donated space, whether it be taking over an empty floor of an old building, asking the local university for the use of several offices, or negotiating for space with a sister non-profit that has more room than it can currently use. Office equipment, furniture, and supplies. It is often fairly easy to obtain excellent used office furniture and equipment by looking in the classified ads in the local paper or making your needs known in such ads, or in your own publications. Stores will sometimes donate paper, pens and other office supplies. Prizes and Premiums. Prizes for raffles and auctions, as well as premiums to help increase response rates and gift size in member appeals and new member solicitations are good candidates for in-kind donations. Individuals will donate all kinds of things ranging from artwork, or catered canoe trips, to the use of a vacation home. Companies will donate merchandise or services—clothing, recreational equipment such as bikes, boats and paddles, river trips, etc. Services. Donated services can be a great boon to nonprofit organizations, whether they be volunteers assisting with telephone answering and mailings or professionals providing services like bookkeeping, public relations, legal, proposal writing, or water quality analysis. The Federal government (and state governments, too) sometimes provides professional services such as planning, facilitation, or marketing to assist nonprofit organizations. Agencies like the National Park Service, the Natural Resource Conservation Service, or the Forest Service have been known to allocate part or all of a federal employee’s time to work with a specific nonprofit organization on a particular project. Sale Items. On occasion, an organization may be able to get in-kind donations of goods or services which it can sell to produce cash. For example, some large charities are currently calling people up and asking them to donate cars, which can then be sold on the open market or to used car dealers. Food and Drink. It is often possible to get food and drink, as well as space, donated for meetings or special events. Since special events are usually not very profitable to begin with, it is very important to get as many of the costs as possible defrayed through the use of in-kind donations. Travel, including overnight accommodations. Some organizations are able to get airline tickets, or frequent flyer miles, donated. Many nonprofits encourage their employees to stay overnight with friends or members, especially in expensive cities like New York, San Francisco, or Washington, D.C. Staying with members not only saves your organization money—it also gives staff a chance to spend quality time with, and get feedback from, your constituents.

When and How to use In-Kind Gifts

See Guest Article:
Small Budget, Diverse In-Kind Gifts, Big Outcomes
By George Constantz

Asking for in-kind donations is a good strategy for your group, whether you are just starting up or have been around for many years. In many cases, these gifts are as good as cash, since they free up money you would have had to spend on the donated goods or services for other uses. While corporations are usually the best source for these gifts, you should also make your individual and group members aware of your needs. The trick here is to publicize your needs frequently enough so that your members think about you at that critical moment when used equipment must be disposed of or they have some down time in their accounting practice.

Tips to increase your chances of success:

TIP #1: Plan ahead.
Like anything else in life, it helps to know what you want and when you’ll need it. Jointly with your board and staff, map out your in-kind needs, develop a list of likely business or individual donors, and decide who’ll make the ask before launching your in-kind campaign. Build redundancy into your plan—try to target at least three sources for every in-kind item you need. That way one prospect is likely to say yes. If more than one says yes, count your blessings and lock in the extras for future use. Know which items are critical for a successful outcome. For instance, one nonprofit succeeded in obtaining the use of a $7,000 per hour heavy-lift helicopter to remove 13 tons of steel girders littering an island in the middle of the Potomac River. This gift would have been useless without iron workers to rig the steel and shoreside cranes and trucks to haul it to a recycling center. The Director wrote to all seven heavy construction companies in the area and, luckily, one came through with everything else needed to make the project a success.

TIP #2: Make your needs known.
Most groups are good at publicizing their needs for volunteer help, but not so great at talking up other services or equipment they require. The most obvious tactic here is to put a “wish list” into your newsletter, but how about sending the list out to your members with your thank-you letters? The more you can get the word out about specific items you need, the more likely you are to find in-kind donors for these items.

TIP #3: Match people to prospects.
If you are uncomfortable asking for an in-kind donation, find people who are not only comfortable doing so, but who actually enjoy it! Get to know your members to discover who owns what, who works where, and who knows whom. Enlist your board.

TIP #4: Think strategically.
In-kind giving is not a one-shot deal. Always keep in mind that you are building long-term relationships. Whether you are prospecting for potato chips, printing, or photographers, your goal should be to meet your needs while giving the donor a favorable giving experience. Make them feel good about being associated with your group and they’ll not only keep on giving, but they’ll likely increase their own giving over time while bringing others into the fold. Even though starting from scratch can be difficult, if you adhere to this philosophy, over time your group will develop a stable in-kind donor base that can be counted on time and time again.

TIP #5: Stay tuned to events in your community.
It’s absolutely fundamental for your group to know what’s going on in your community, and who the movers and shakers are. Constantly clip and file your way to success. For example, after reading about a corporate downsizing, one group turned a misfortune into an opportunity to completely furnish their offices. Also, after the construction company mentioned above helped clean up the Potomac, the Director read an article profiling the company’s owner on the occasion of his giving $15 million to his alma mater. The article disclosed that he commuted to work by helicopter and that his daughter ran the family foundation. The Director wrote to both and obtained twice-a-year use of the helicopter for photo surveys of the river, the family foundation made several $5,000 gifts, and his construction company put them in their budget for $1,000 every year.

TIP #6: Find the decision-makers.
Empowering the right people to say “yes” is the key to in-kind giving. Roam\ supermarket aisles, or leaf through magazines, for products you’d like to obtain. Jot down company information from labels or ads and call their headquarters to find the person in charge of product donations. Note spelling of names, titles, addresses and phone and fax numbers. Mail or fax request letters to these people, then follow up with a phone call after a few days. Be straightforward with the nature of your request, tell them briefly about your group, and be sure to include a copy of your 501(c)(3)-exemption letter. Everything you do should create an impression that your group is professional, reliable and a worthy partner.

TIP #7: Remember that companies are made up of ordinary people.
Conservation groups sometimes view corporate sponsors such as contractors and developers as “the enemy.” Overcome this trap and approach each prospect with an open mind. When the Potomac Conservancy spearheaded a yearlong flood recovery effort along the Potomac River, they succeeded in bringing some 45 companies together with in-kind donations of everything from bulldozers to 30-ton cranes. What they discovered was that the owners and employees of these companies shared their values and loved to canoe, kayak or fish. All of them wanted to see the river restored just as much as The Conservancy did. Once they came on board, they brought their colleagues in tow. By finding common ground, they forged a community of kindred spirits who became permanent friends of the river.

TIP #8: Know your donor’s giving style.
Size your request to the prospect. Don’t expect a small business to give away thousands of dollars worth of printing. But perhaps the printer can identify major suppliers who can donate paper and thus reduce your overall cash outlay. Supermarket chains often are besieged with urgent requests for specific items and would prefer to give $100 store coupons. Request these a couple of times a year and save them for special events. Learn a company’s giving patterns, markets and motives. What works for one group may not work for you. For example, Coca-Cola periodically prints a panel on its cans promoting the Chesapeake Bay Foundation. This is because their mid-Atlantic distributor’s territory precisely overlaps the Chesapeake Bay watershed. Don’t force things—try to find a natural fit with your donor.

TIP #9: Create giving opportunities.
Many people want to help but don’t have a clue as to how to participate in community projects. Think creatively to involve these people in your organization. During one flood recovery effort along the Potomac, the head of a local group realized at the last minute that they needed to place silt fences around their project area for sediment control. Acting on a tip from the contractor we had in hand, he called the owner of a business that did nothing but silt fencing and was quite surprised when she said “Oh good! We’ve been looking for a way to help!” Her crews were on the site at dawn the next morning and we were set to go. Had he not asked, her company would have missed a wonderful opportunity for community involvement.

TIP #10: Sell success.
Everybody loves success. Once you’ve located one or two donors for an event, be sure to trumpet that fact to successive prospects. For instance, if you are asking for beer or wine for an event, be sure to let your prospect know that the ABC Restaurant is donating the cheese and vegetable trays and that the DEF Company is donating pastries. This telegraphs a message that others are invested, that they are in good company, and that this is a good opportunity for them to be part of a highly successful community event.

TIP #11: Make giving easy.
Don’t force in-kind donors to go out of their way to help you. If you are seeking product donations of food or beverages for an event, it is essential that you line up a local store or restaurant to receive deliveries. That way you make it easy for a corporate donor to load the items on a truck bound for businesses that are on a driver’s regular route. Be sure to pre-arrange this with the receiving business and be sure you don’t overload the recipient’s storage capacity (particularly refrigerator space). You’ll increase your odds of success tremendously if you fit your group’s request into the donor’s business routine.

TIP #12: Timing is everything.
Companies often can’t turn on a dime to accommodate donation requests. Give them adequate lead-time and make your request seasonally appropriate. Know the rhythm of the business cycle. If you need cheese and veggie trays for an event, approach a restaurant a couple of weeks ahead so they can have adequate inventory on hand and can work you into their production schedule. Don’t seek donated equipment or services at a peak sales period (i.e., don’t expect an outfitter to donate a raft trip on a prime summer weekend).

TIP #13: In-kind works best with some cash.
Don’t expect to get everything you want for free. Although this sometimes happens, be prepared to fill in gaps with cash. When you’ve got 80% of what you need lined up from in-kind donations, it often makes sense to pay cash for the other 20%. Also balance time invested with returns. Does it make sense to spend long hours to secure a $100 prize? If your group is long on volunteers and short on cash, it might. Just remember to keep an eye on the bottom line.

TIP #14: Piggyback on corporate advertising.
Businesses of all sizes spend huge amounts on advertising every year. Find ways to use their investment to put your group’s name before the public. “Tagging” is one way to do this—suggesting that they use the last few seconds of radio ads to insert a “proud sponsor of the ABC River Conservancy.” Over time this creates what are known as “retained impressions” that build your group’s visibility. One Executive Director persuaded the president of a major real estate company to use the top third of its weekly full-page newspaper ad to thank volunteers who had rebuilt a network of walkways leading to the scenic overlook of the Great Falls of the Potomac, and to welcome back the people of Washington to the crown jewel of the river. The ad included a membership coupon that brought many new members, and the real estate company wrote a $5,000 check to boot. Their employees were so pleased with being identified with this endeavor that the practice of showcasing community activities has become a company tradition.

TIP 15: Develop an institutional memory.
People come and go in organizations as well as businesses. Don’t put your\ group in the position of having to start from scratch every time there is staff turnover. Keep track of sources and giving histories for in-kind donations. A simple three-ring binder indexed by type of product or service will suffice, although a more sophisticated database system will provide more flexibility and indexing capacity. That way when you ask again, you can remind the donor of their past donations and be assured you are not asking too often.

TIP #16: It’s OK to look a gift horse in the mouth.
Before accepting in-kind gifts, check them out. Usually, donated items are in satisfactory condition, but not always. Especially with used furniture and equipment, make a point to look the items over before accepting them. Computers which don’t interface with other equipment can create real problems down the line. Whenever possible, get someone who knows your office setup to have a look at such items before you expend the time and energy to pick them up and have them installed. If you decide to turn the “gift horse” down, don’t forget to thank the donor for thinking of you.

TIP #17: Create recognition opportunities.
Recognizing in-kind donors is just as important as it is for cash donors. Everybody likes a pat on the back. But be realistic about what you can do. Don’t promise a potato chip donor that you’ll get them featured in the New York Times. If donor recognition at an event is inappropriate, tell them so. On the other hand, don’t overlook any opportunity to publicly acknowledge in-kind donors. When possible, encourage your members to patronize businesses that make in-kind gifts and to let those businesses know that their support for your group is appreciated.

TIP #18: Leverage your in-kind gifts.
In-kind gifts can be used to leverage other gifts in a number of ways. Including them in a foundation budget shows the foundation that you are marshalling your resources effectively and, in the case of in-kind labor, that you have a lot of committed people supporting your project. They can also be used in many cases to match government or foundation grants. Finally, they can sometimes generate individual gifts by serving as premiums, or even as a match (P.S. “XYZ Company has pledged to donate one seedling pine for every dollar donated to this appeal!”) in your fundraising appeals.

TIP #19: Talk to your peers about in-kind prospects.
In the nonprofit world, we often forget that our peers are a wealth of information. While groups are often loathe to reveal the name of a new foundation or individual donor, it’s another thing to share the name of a company who donated a great prize for a raffle or a wonderful place for a party. Don’t be shy about asking others for tips.

TIP #20: Remember to say thank you.
Above all, remember to thank in-kind donors and the volunteers who recruit them. The process of obtaining a gift is not complete until this is done. You can do this in person, with a short note, in a newsletter article, with a recognition plaque, or in a variety of other creative ways.

Legal, Financial and Matching Considerations

Acknowledging In-Kind Gifts

As with cash contributions, your organization should acknowledge all in-kind gifts. However, you are required by law (for tax deduction purposes) to acknowledge in-kind gifts of goods received in excess of $250. (The law does not require you to acknowledge donated services, as the donor cannot take a tax deduction for services.) Putting a value on contributed equipment, goods or services is always the responsibility of the donor, and if the value of the donation is important (for matching or other purposes), it is best to ask the donor to indicate that value, in writing, when it is made.

In your written acknowledgment to the donor, you should fully describe the in-kind donation. You should also note whether you provided any consideration, in whole or in part, for the in-kind goods received. For example, if an outfitter agrees to donate most of the proceeds from a river trip to your organization, but asks that you pay the salaries of the two guides, you acknowledge the donation of a two-day trip for 10 people on the New River, but also stipulate that you paid a sum of $80 to the outfitter to reimburse the two guides.

Recording In-Kind Gifts as Income

It is very important to document carefully all in-kind gifts so that you can properly acknowledge the gifts individually and in your annual report, go back to your in-kind donors for additional gifts, and use these in-kind donations, where appropriate, to match foundation and government grants. But what about including the in-kind gifts as income in your financial accounting?

For in-kind donations of goods and equipment, the rules established by the Financial Accounting Standards Board recommend that each organization establish for itself a policy governing at what level such gifts should be recorded as income. For in-kind services, the new rules require that an organization record in-kind services as income if:

• the in-kind services create or enhance nonfinancial assets (for example, a group of volunteers construct a new building to house the organization), or
• the in-kind services require specialized skills, are provided by individuals possessing those skills, and would normally have to be purchased. (for example, donated accounting or legal services)

Other in-kind services which do not meet the above criteria, such as volunteer hours spent answering the phone, getting out mailings, etc., should not be recorded as income, although it is recommended that they be documented in the financial statements with a footnote.

For small nonprofits, the question of whether to record or not to record in-kind gifts hinges on whether their omission from the financial statements will cause readers to miss significant work that an organization has accomplished. If you have questions on the fine points of recording your in-kind gifts in your financial statements, it is best to consult a Certified Public Accountant.

Using In-Kind Donations as Matches

Even if your organization does not record in-kind gifts as income as described above, careful documentation can allow you to use donated goods and services as a match for grant purposes. In using in-kind donations to match government and foundation grants, here are a few tips:

• If you are hoping to use in-kind goods or services to match a government or foundation grant, always check first with the agency or foundation to see what kind of in-kind match they will allow, as the rules governing such matches vary tremendously from one agency or
  foundation, to another.
• Services or tangible goods used as a match must usually be contributed during the period of the grant. For example, donated water quality analysis services performed in November, 1997, could probably not be used to match a grant for a water quality assessment project slated to begin on January 1, 1998.
• Donated goods and services used in a match must directly support and further the goals of the grant. For example, an in-kind gift of filing cabinets could not be used to match a grant for restoring the natural vegetation along XYZ Creek, although a donated truckload of native plants probably could.
• If donated services are used to match a grant, the value put on these services must be reasonable for the work carried out. (A good criterion here is: would the organization have paid this rate for the services if they were not available as a donation?)

When you’ve done a good job asking for in-kind gifts, watching the goodies pour in is just like Christmas. The results are quick and tangible and give all involved a sense of ownership and accomplishment. Cultivate these feelings. Treat in-kind donations as an essential component of your overall fundraising plan and your efforts will be richly rewarded.