In-Kind Gifts:
How to Acknowledge and Recognize Them

When you receive gifts of products, time and services, be aware that your organization can be held in even greater regard by donors of such In-Kind gifts, should you express your gratitude in a meaningful way—in a manner far and above how these contributions are usually acknowledged by non-profit organizations. This can be accomplished in strict keeping with the applicable IRS rules and regulations, which are especially explicit when it comes to In-Kind gifts and how non-profits handle them.

By law, non-profit organizations cannot provide a donor with the dollar value of an In-kind gift. Such valuations when applicable, relative to “fair market value” of In-Kind gifts, need to be professionally assessed and certified elsewhere—if they can be—and that is the responsibility of the donor. This certification subsequently needs to be resolved with the professionals and others who prepare the donor’s tax forms—whose work in turn will need to be reconciled with IRS regulations. In instances where time and service are donated, no tax break whatsoever is allowed, as the IRS Publication 526 clearly states, “You cannot deduct the value of your time or services…”

This unique aspect of In-Kind gifts often causes a non-profit organization to acknowledge them in understated, and almost offhanded ways, unlike the precisely stated amounts cited for gifts of cash and stocks. As well, the dollar value of gifts of cash and stocks can be directly related to specific programs and services made possible by such support, which is not usually the case with In-Kind gifts. Thus, appreciation of In-Kind gifts is not always expressed as effectively and graphically, but it can and should be.

A non-profit organization can acknowledge In-Kind gifts with descriptions of their practical value to the organization, and make some reference to their worth in dollars—what they might have had to pay “retail.” Most non-profit organizations could treat their In-Kind gifts in somewhat the following way:

Sample Acknowledgment for an In-Kind Gift

“Thank you for your generous gift of ________(Full Description)________ which we received on ____(Date)____. Your generous contribution will help to further the important work of our organization.

(Note: The benefit to the organization of the In-Kind contribution may be expressed in exact terms of its direct application to the organization’s operation, or it may be more appropriate that an indirect reference be made when the In-Kind gift’s application is not as sharply defined.)

While, according to IRS regulations, you will not be allowed to declare the value of your donation from our acknowledgment, we can say that, but for your generosity, we likely would have had to expend approximately $________ for what you gave as an In-Kind contribution. These are dollars saved which we are able to apply directly to support the programs and services we provide for the well-being of those whom we serve in our community.”

Recognition: Same as Cash

In addition, appreciation of in-kind contributions can always be publicly recognized by non-profits in their annual reports and other publications, with the donors’ names listed under the respective gift category amount related to the “retail value” of products, time or services donated. As stated previously, those figures would not be IRS-deductible amounts, and are not certified as such. But the public gestures by non-profit organizations regarding the “market worth” of In-Kind gifts are always greatly appreciated by the donors.

There can be little doubt that your In-Kind donors would be quite pleased to see their names listed in a contribution category of that “retail cost” right up there with the givers of cash. This public listing has been practiced for many years, with those contributing cash finding no fault when In-Kind donors are placed in the same category with them. And more importantly, donors of In-Kind gifts frequently express their gratitude for being recognized in such an appropriate and thoughtful manner.

Don’t Be Unkind to In-Kind

To reinforce the idea that it is a well-served practice to recognize In-Kind gifts in the way suggested, and that by not doing so could disappoint or alienate the donors of such gifts, I am reminded of two incidents.

Recognize What it Would Have Cost You “Retail”

Recognition of an In-Kind gift became a serious issue with a non-profit client of mine following the conclusion of a successful capital campaign. The new building was up and operating. Everyone—board, staff and the community—was satisfied and happy. The trouble came as the listing was being finalized for permanent and public recognition of the capital campaign donors on a bronze recognition plaque for the lobby, in preparation for the new building’s dedication event. Names were placed in columns under the specific and respective contribution levels. Those of us who were involved in various leadership roles for the campaign together reviewed, edited, and then approved the final rendering of the listing before it was to go to the plaque manufacturer. Then, two of the organization’s leading board members abruptly demanded the removal of the name of a major In-Kind donor from the $15,000 to $19,999 category, and demanded that the donor’s name be repositioned in the $1,000 to $4,999 category.

The In-Kind donor was a paint manufacturer. The original campaign expense budget for the paint (prepared well before its donation) reflected a best price to be paid in the market in the amount of $15,000 for the gallons required to paint all of the rooms in the new, several story building. The two shortsighted trustees adamantly insisted that, from experience with their own businesses’ manufacturing costs, the true expense to the paint company would only be approximately one-third of the retail price, and that was the gift category in which the paint contribution should be recognized. I went tooth and nail on this, and I finally won over the two truculent board members when they realized that, had not the paint been donated (no matter the cost to the paint manufacturer), the non-profit would have had to raise additional cash in the amount of $15,000 to pay for the paint.

Sometimes, being stubbornly practical and literal can do damage to the relations a non-profit has with generous benefactors. Imagine the officials of the paint company attending the dedication event of the building they supported, only to see their company’s name placed in a category not in keeping with the worth of the paint as they knew it—but greatly diminished in value as seen by the officials of the non-profit organization.

In-Kind vs. “Real Money”

I was going into the last month of a fund-raising consulting contract for a capital campaign with a social service organization. All had gone extremely well over our ten-month partnership. The organization’s volunteer leadership and staff did an outstanding job, the money was raised for the new building, and I felt that the last month of my contract required greatly reduced counsel on my part. Even if no counsel was necessary, the contract required that I be paid. In any event, I told them not to pay me for the last month. As I saw it, I “donated” $3,000 to the organization. Naturally, I did not attempt to declare that “value” for a tax deduction. But, when the celebrations were over and the new building was dedicated, I, with some anticipation, looked for my name to be listed in the campaign publication under the “$1,000 to $5,000” category, or included with their listing of In-Kind gifts. My In-Kind contribution was not acknowledged in any way. I asked the Director of Development about what I thought to be an oversight. The answer was quick and curt, “We appreciate what you did, but it was not “real’ money.” I saved them $3,000 from their capital expense budget, and the money was not “real?”

Valuation: It May Not Seem Fair, But It’s the Law

As the two foregoing examples show, the value of In-Kind gifts for which organizations should thank donors is not necessarily the same as the value that the IRS will allow for tax purposes—or that the donors perceive themselves as having given.

When it comes to putting a value on In-Kind gifts for the purpose of donors taking tax deductions the rules can seem to donors to be unfair. Basically donors of In-Kind gifts cannot take a deduction for the time that they donated as a part of that In-Kind gift. Only the actual out-of-pocket expenses for which donor have receipts can be treated as a tax-deductible charitable gifts.

For example, let’s say there is a furniture maker who determines what to charge customers for a table by multiplying the number of hours he works on the table by an hourly rate at which he values his time and expertise and then adding that amount to the cost of materials. In this example let’s say it takes him 10 hours to make a table and that he values his time at $50 an hour. And let’s say that the materials he used to make the table cost $100. He may see the value of that table totaling $600, and might try to get that price if he were to sell it. But instead of selling it he gives it to a nonprofit.

The question the furniture maker/donor and the nonprofit have before them is: What is the amount that the furniture maker/donor can take as a tax deduction for his/her gift of the table? The answer according to the IRS is simple: $100—only the out-of-pocket cost that the furniture maker/donor incurs. It doesn’t matter that he believes he could sell the table for $600. The furniture maker/donor’s time and skill–the value he adds to the cost of materials is not tax deductible.

Why does the IRS neither accept nor itself place a value on the donation of the furniture maker’s own time and expertise? Because there is no universal formula that can be applied to our furniture maker’s time and expertise to determine its fair market value (FMV). There are too many variables involved. The IRS could not relate to one craftsman’s tax break claim of a $50 per hour rate to another’s of $150 per hour. To complicate matters even more, imagine the differences when it comes to the total time taken to make the furniture. The per-hour charge, and time taken to make the product, are variables which cannot be reconciled by the IRS.

It may not seem fair, but it’s the law. Arguments could be made for a different tax valuation structure, but those arguments would need to be made to Congress not the IRS. The latter only administers the laws that the former makes.

Never Take In-Kind Gifts for Granted

The final message here is that you must regard all types of “In-Kind” gifts with the care and consideration they deserve. It’s so easy, and so appropriate to acknowledge “real” cash and securities properly. But all too often when it comes to In-Kind gifts, it’s another kettle of fish. It should not be.

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  1. I am a professional video producer/editor for a major news network and I volunteer at a 501C3 museum producing educational and marketing videos which they post on social media.
    I understand that I can not claim an in kind deduction for time and services, but can I claim an in kind deduction for the market value of the finished videos that a production company would charge?

    • Mitchell,
      Sorry, but the answer is no.

      Once you have donated your time and professionalism, the end product,no matter how used and valued, plays no part whatever for you to receive a tax-deduction.

      The IRS rules are clear at the onset of the declaration that such services are not tax-deductible, with no follow up conditions.


    • Hi Mitchell,

      You can deduct some expenses related to your contribution. I’d suggest you check with a tax-focused CPA in your area. There are rules that forbid your “services” from being deductible but the expenses related to those services might be deductible.

      I drive 900 miles each year to an event that I volunteer at (I am one of 3 who produce the event so its a major undertaking). I am allowed to write off my hotel room, food and mileage because I am paying for those things in direct relation to my volunteerism. See page 5 of Publication 526…it tells you a lot about this.

      Although I am a CPA I do not “give tax advice” outside of work so please contact a local CPA or perhaps your local university to see if a tax student might help you research what you CAN do. The answer is never “no”, its always “lets see what we can (legally) do!”

  2. I work for a publishing company which includes several newspapers. Can the corporation claim a charitable deduction for the fair market value (at the going advertising rates) of publishing a promotional article for a 501(c)(3)?

    • Ray,
      Yours is a Gift-In-Kind. The FMV may be cited by the receiving non-profit, but only in the way I cite above in my article–what it would have cost the NP “retail.” The money you “saved” them.

      Your accountant and auditor will decide how the company books will, or will not, reflect the GIK.

      Business expense? Advertising expense? Such a determination must come from within the company.

      The NP cannot provide a tax-deduction acknowledgment in the same way it does for gifts of cash.

      • Thank you, sir! I appreciate the information.

  3. Thank you for this great article! Our non-profit receives support from gyms, CrossFit affiliates, and martial arts facilities in the form of discounted memberships. This directly supports our mission of helping veterans suffering from PTSD through physical fitness. My initial thought is that the discount is considered tax deductible, but the “You cannot deduct the value of your time or services…” statement has me doubting myself. Would you mind helping me out with a couple of questions?

    1. Does “your” define specific individual services or does it include organization services as well (e.g. classes provided by gyms)
    2. Is the discounted membership fees offered by the supporting organizations tax deductible?

    I really appreciate your help.

    • Robert,
      To question No. 1, yes it does apply to businesses — the IRS will not allow tax deductions for services. That is true no matter the source of the services provided.

      And the second question is one to be answered by the donors of the memberships.

      No doubt they have extensive prior experience with such donations, and they themselves are the only ones to declare to the IRS what is legal—business expense, advertising, etc. It is entirely up to them.

      The only thing you should do is follow my suggestion in my article above for the type of acknowledgement letter you will send to the donors, recognizing the discount as money which was saved from spending for the full membership, whether the saving is yours, or the veterans who themselves received the discount and personally paid the difference.

      Either way, that is how you should recognize and publicize the discounted memberships—and possibly with some compelling photo opportunities of some vets at their workouts using the donors’ facilities, made possible by your organization doing its good work.

  4. I am a sign language interpreter and have donated my interpreting service for an event. I normally would charge for that time. Can I ask for a letter stating the time and how much the service is worth for my taxes? Thanks!

    • Corinna,

      Unfortunately you cannot do that. All the IRS will allow is your out-of-pocket expenses.

  5. For the last 5 years I have donated my time to running a food pantry for my church, frankly I stepped into it because if I did not than a service to our city community would close. I do have managerial and accounting skills and at the time I was not employed so I had the time. I still am not employed by another company and receive only a mileage amount for the miles on my car travel to and from home (4 days a week, and I spend 4-5 hours at the food pantry, not to mention donation pickups from various grocery store donors). Which looks like it will be discontinued since the funds have run out in the account.
    My questions, there seems to be a disconnect of how much real work this is and the cost to me, my time is valuable to me. How do I convey this (there are a number of people that volunteer their time at the church in various capacities), can I submit a time sheet on a given week and than do a average hours worked, with the rate/hour based on my last job? For 5 years? I know it would not be an amount they would have spent, since they were clear that without a grant they would not keep the pantry (and clothing closet) open, but they had a we feel good having a FP and CC in the church.
    Second question – I use my laptop for the job, even 5 years ago the cell phones that were out had more RAM/better processors than the computers that were here. Can I add that to a donation list or at least a real commodity that is utilized.
    Third – I have purchased items like ink – for my personal printer that I also use, and pens, and other misc office supplies, which I use both for myself and for the food pantry, how do I separate them out? Amusingly the printer is a high end Dell printer that the church office placed in the church rummage sale for 10.00 and I paid out of pocket for.
    —In short I feel increasingly un-valued as a volunteer and as a type of donor. Yet I am being asked to do more and more, for no compensation.

    • Debra,
      (1) The food pantry management is missing something here.

      That organization itself should have time and schedule forms which you volunteers can fill out weekly regarding the time you give. There should be some sort of annual tribute gathering for the volunteers to be recognized—and appreciated. The place where I volunteer provides an annual luncheon for just that purpose.

      They are missing a good thing too, where proposals to donors for money could be greatly enhanced when they can cite the number of volunteers and the total hours they donate in a given year to serve the food pantry. That is something which would be impressive and compelling.

      (2) Sure, laptop time, while not tax-deductible, nor is your time at the food pantry, nonetheless is a Gift In Kind as sort of a donated professional service.

      (3) You should be able to reasonably determine the cost of the ink and other supplies which are used on the food pantry’s behalf. You give them a letter with that information, and ask for a form which you can present to your tax form preparer to possibly declare those out-of-pocket expenses you absorbed for the good of the food pantry.

      The food pantry, it seems, is rather oblivious to the worth you and other volunteers are to the organization. How that can be corrected will require some thought on your part to suggest recognition without seeming to blow your own horn.

      I think an innocent and helpful approach would be for you to provide the best tally you can come up with regarding number of volunteers and hours in a given year and suggest to management that perhaps that data would be a very effective solicitation tool to impress and motivate donors. As well, with such an imposing listing, it should be obvious that the volunteers should be recognized, especially those doing so for the longest time.

  6. I am becoming more involved in a 501c3 non-profit locally and have given, what I believe to be three different types of GIK items.
    The first being pro bono interpreting/translation services for an annual gala. After reading this article it seems as if this is not deductible though, if my time had it not been gifted, would have costed them $75 for the event if they hired anyone in the area.
    Second, I hand made items for them to sell at one of their many events and I think I understand the only amount I could claim is the cost of my supplies, not the price in which the organization sold them for? (That price was determined by me and the cost of selling those items at craft shows.)
    Third, I purchased some key chains for the organization and donated them to either sell at one of their events or as a donation level incentive to have people donate a specific amount. Is the cost of those key chains something that can become a deduction?
    Thank you!

    • Monique,
      How very fortunate for that non-profit in that they benefit greatly from your generosity in a number of ways. I know you do your good works from the heart, but you should receive appropriate credit from the organization, and any possible tax deduction.

      The organization can do its part by recognizing your GIK according to the example I give in my article. The organization cannot certify value, but it certainly can declare the value to the organization in terms of what your GIK would have cost them—whether the organization would have bought such services and items in the first place. It’s just good donor relations to cite such things in that way.

      To your three questions:

      First, do scan the following for what you need to know relative to what you can and what you cannot deduct when it comes to GIK.

      — IRS Publication 526 (two ways to access)

      1. See the quote from the section, “Contributions you can’t deduct.” (Value of time and services.)
      The quote is explicit: “You can’t deduct the value of your time or services.”

      2. See your tax preparer should you have enough out-of-pocket expense to file for a deduction, being sure to have receipts in hand. This is between only you and your tax professional. The organization, again, should only cite the value to them in terms of those costs. You cannot use any documentation from the organization as being valid for tax relief.

      3. The key chain expense can only be possibly applied to your tax return with advice from a professional. The organization treats the value in exactly the same ways described above.

      As you scan IRS Publication 526, I know you will readily see how any and all of your generous contributions are treated, and you can follow the rules accordingly.

  7. Thank you for this. A question: Let’s say the furniture maker donates 10 tables to a nonprofit. Each table’s donated value is $100. Can the nonprofit then provide those tables to an auxiliary volunteer group operating under the nonprofit’s 501c3 for that auxiliary to sell at a retail shop they run in order to enhance that auxiliary’s annual donation to the parent nonprofit?

    • Dan,
      Before we move on to the “sure, you can,” part of my reply, there are two comments I think must be considered.

      1. Whether or not the furniture maker crafted the 10 tables for an originally-asked purpose, and one which the furniture maker expects regarding the use of the tables.

      What is that expectation-understanding for making the 10 tables in the first place, if any?

      2. If the donation is unrestricted, then yes, the auxiliary can certainly take on the sale of the tables.

      To avoid any possible disappointment on the part of the furniture maker, the ladies of the auxiliary must try hard to sell the tables for more, at, or near, the estimated $100 value of each table, the value which I expect was cited by the furniture maker.

      There must not be a “fire sale” with the tables sold for an amount which would be offensive and disappointing to the maker for the time, effort and expense in making them for the organization.

      • Tony,

        In my case, the donation is ~$7,500 worth of chocolate for unrestricted – “whatever you need it for” – use by our organization. The chocolates were not created at our request, and would otherwise have wound up being sold in our donor’s retail shops. It sounds like we would have the green light to go ahead and sell the chocolate. This was a new and unusual scenario for us, which felt like it needed some research and conversation about propriety before moving forward.


    • Dan,
      We can be sure the donor does not expect organization staff to eat $7,500 worth of chocolates.

      There had to be some reason for such an unusual donation. What was the message accompanying the donation of the chocolates? If it was “whatever you need it for,” then you have your course of unrestricted action to follow.

      Chances are the selling date may be out to a point where, though edible, they may not be OK for his retail sales.

      Depending on how packaged, maybe some boxes can be given to special donors and the chocolates donor could get additional credit that way.

      You can no doubt be creative in the presentation. “We’re sweet on you for your generous support.” Not so hot, I know, but you get the idea.

      Or, if it is OK to sell the chocolates, go to it.

      In any event, just be sure that the chocolates do not turn out to be questioned if the stock shows it being outdated, regarding appearance and freshness.

  8. Hello. Very good article. I’m trying to find on the IRS website or a publication that explicitly states that a non-profit cannot determine the value of an ‘in-kind’ donation in a thank you letter. It may be implied as there are all sorts of publications for donors in determining the value of their donation, but looking for something more ‘black and white’ from the non-profit’s perspective.

    • Greg.

      IRS Publication 526 will have all you need to know. See the section about non-cash donations.

      A key declaration in that section reads following, with quotes, and from it you can see what the donor would expect from the receiving non-profit — with no values involved. The values are up the donor to declare and prove.

      “If you make any non-cash contribution, you must get and keep a receipt from the charitable organization showing:

      — The name of the charitable organization,

      — The date and location of the charitable contribution, and

      — A reasonably detailed description of the property.
      (End of quote and no mention of value.)

      The charity cannot certify In-Kind value. It can and should only cite the value to the organization in the way I provide in the sample letter in the article.

  9. I guess as a follow up to my initial questions, does it change the equation if we were to agree to issue receipts to in-kind donors for this third party administered event?

    Thank you,

  10. I found this article very interesting. This past year has been my first foray into non-profit accounting. I am currently acting as Controller at a non-profit home health and hospice agency. We have a third party putting on a golf fundraising event for us, and have received inquiries about our tax id number and potential deductibility of raffle prizes and other awards donated for the event. All that has currently been requested of us directly is what I believe to be a blanket letter stating what the funds raised at the golf tournament will go toward, some information about our entity and our tax id number. I assume that, as in the other instances cited here, it will be up to the donor to determine the value of any tax deduction with the help of their tax professionals. However, from a reporting perspective, do I open myself up to needing to collect donor information for these individual in-kind gifts if we offer our tax id number which I believe would insinuate that the gifts could be tax deductible? Or is it still fine for us to just acknowledge the total gift from the organizers in our records?

    • Jason,
      Your tax ID number is public information—some organizations even print the number on their stationery. You are not implying anything of concern. What the ID number does give the third party, and others, is your stamp of accreditation as a non-profit organization.

      I assume the third party is a professional golf fund-raising event planner?

      If that entity is soliciting and collecting prizes and awards in your organization’s name, I think you owe it to the donors to accept them as gifts to your organization and to issue whatever is appropriate acknowledgment.

      I do not think you would want donations to be entered into the books of the (for-profit) event planner, and to have them simply turned over to you. Maybe you would, but how would the donors feel about that?

      You should use a blanket form acknowledgment, or a more personalized acknowledgement for what you deem as major support, you do just as you cited, and just as I suggest in my article.

      That is to simply describe the item, what you “understand” as its worth, and the generous donation’s positive impact on your organization.

  11. Great article! I’ve been reading conflicting info about this, but if a donor does not assign a value to the gift, but it is of value (IE 100 diapers, computer monitor, etc) is the nonprofit allowed to assign a fair market value for bookkeeping purposes, both for Development and finance? This value would, of course, not be assigned to the GIK from the donor’s acknowledgement perspective.


    • Geoff,
      Just determine what the GIK would cost “retail” as best you can, then use that FMV internally as you desire.

      The only time we entered a GIK into our accounting system was when such a GIK directly relieved a budgeted operating or program expense.

      Otherwise, we only entered those values into what we claimed as achievements to our fund-raising program as a “paper credit” to our development activities.

  12. We have companies who donate their truck drivers time (paid by the company) and gas (paid by the company). I assume both are still considered in-kind and we cannot give them a receipt, correct? We do acknowledge them for the value they provide us, since it’s so appreciated. What if the company gave us a donation, and then we paid the driver and re-imbursed for gas. Would that be “allowed” and then the donation could be considered a tax donation? Thank you

    • Susan,
      Correct, with the first part of your comment.

      Acknowledge, as I suggest in the article, as you “understand” the value. And the extra touch regarding that they “saved” you from incurring the expense, is a good thing to say too.

      (Even in those instances where a non-profit receives an In-Kind donation of something they can use, but which they would not otherwise buy, the NP still can cover both situations by saying something along the lines of, “Were we to have purchased ___________, it would have cost us $ ________.)

      Correct, as well, in the second part of your posting that a company can make a cash/check donation given directly to your organization, and you in turn can directly pay the vendors. (Don’t have the mutual transactions down to exacting decimals. Round off the values. It does not really matter, it just looks better.)

      While the vendors can then claim tax-deductions, they also know that they must as well declare your payments as their earned income.

      They should be in position to know which method would be better for them. That is something you do not contend with.

      • Awesome in for for Non Profits. This article coincides with an idea for an idea I have.
        Suppose a volunteer were to donate their time, say to teach a skill for an educational NP, that is an in kind donation, right?

        And, suppose one turns that model into an organization, would NPs have to submit proposals to get the donations?

      • Lance,
        Right — in answer to your first question. Absolutely an In-Kind gift.

        I am not sure about your meaning with the second question.

        Is it that the “model” comes from the “skill” to which you referred earlier?

        If so, are you thinking that the model could then be the stand-alone core principle (Mission) required to set up a new non-profit organization?

        Or maybe you are thinking that the skill taught — turned model — could be part of what a number of non-profits do on an on-going basis for those whom they serve?

        Either way, or in any other way, the skill which was taught, should it be for a new or improved program, project or service to better carry out the mission of a non-profit, or non-profits, would certainly qualify for the seeking of donations from any source.

        That would be considering there are any new or increased expenses connected to that program, project or service involved with that taught skill or model developed.

        Any further enlightenment would be appreciated.

  13. Does your in kind donation have to go through a 501(c) nonprofit to get the matching $$

    • Tammy,
      We need more information to better understand your question.

      However, from what you did write, it’s not a tax-deductibe-possible donation in the true non-profit context if an In-Kind (any gift) is not given to a 501 c 3 organization.

      If there is some sort of match offer/challenge to attract such donations, the giver of the matching would need to be consulted regarding that donor’s wishes or expectations.

      The matching offer and the donations made to it, can all of course be made in a non-501 c 3 circumstance, but no donor can expect whatever tax deduction they may wish to otherwise claim.

    • I am attempting to craft an in kind acknowledgment letter for some furniture we purchased from a vendor/furniture store. The furniture was actually purchased at a significant discount, so it was not a complete in kind donation.
      I am not sure how to work the letter. The donor is requesting acknowledgment for tax purposes, which is understandable, but I’m not sure how to word the letter when goods are partially donated and partially paid for.
      The IRS states in the document, Charitable Contributions : Substantiation and Disclosure Requirements for Exempt Organizations, page 2 under “Written Acknowledgment” #5. “a description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution”
      While we did not provide goods or services, we did pay a discounted amount for the goods we received.
      Do you have suggestions on how to write this acknowledgment letter?

  14. Hi Tony,

    Thanks for your articles. I own a catering company and we often donate good and services to non profits in our community to a generous degree. Frankly, we are discontinuing the practice. Just tired of being treated like “second class” donors.

    • Stacy,
      I know exactly how you feel. That’s one of the main reasons I wrote and posted my article regarding In-Kind donations.

      As an old, long-time, non-profit fund-raising practitioner, I have far too often been made aware of the short-sighted attitude of many receivers of In-Kind donations which they communicate to their generous and caring donors of such gifts.

      You may have noted my strong references to such thoughtless attitudes and practices in the section of my article above, titled:

      — “Don’t Be Unkind to In-Kind”

      There, you can read about the way a non-profit would have terribly slighted a major donor of paint for the organization’s new building.

      There too, I have cited my own personal bad and disappointing experience when my donation of the final month of my consulting contract fee was not regarded by the organization as “real money.” I was not even a “second class” donor. To them, I was no donor at all.

      Thus, at the end of the article I declare to all who would would think in such narrow and cavalier terms:

      — “Never Take In-Kind Gifts for Granted”

      “The final message here is that you must regard all types of “In-Kind” gifts with the care and consideration they deserve. It’s so easy, and so appropriate to acknowledge “real” cash and securities properly. But all too often when it comes to In-Kind gifts, it’s another kettle of fish. It should not be.”

      Maybe it would only take a little reminding on your part to those non-profits regarding the insensitive way they do willingly accept your generous In-Kind donations. If they do not get it, then move away and tell them why, then move on to another worthy charity.

      Through it all, however, reconsider your plan to discontinue giving. I can see from what you have been contributing that you may feel less fulfilled personally if you discontinue your donations.

      Certainly, you care about what is good in your community–even if some of the receivers of your In-Kind donations seem to be uncaring.

      And, we know there are non-profits out there which would greatly benefit from your generosity, and at the same time, know how to show it gratefully, enthusiastically, and treat you as the first-class donor you are.

  15. We are planning for an annual fundraising bike ride to benefit one of our programs. Each year, we have one bike shop want more recognition than seems appropriate for it’s contribution. The shop donates about 5 hours of bike mechanic support (one person fixing up bikes as needed) and a bike (shop is valuing at $500). The shop also wants to donate water bottles to our event, but wants recognition for that donation. The shop says the water bottles retail at $6 each and will be donating around 800 = $4,800 worth of sponsor recognition they are asking for. However, these water bottles aren’t something that we’d be paying for anyways if we did not receive the donation. Do we have to give recognition for the water bottles, if it isn’t something that we are needing/ it’s not saving us any money like someone donating paint for a building, for example? Also, would the recognition level be based on the retail value of the bottles or the cost the bike shop paid to get the bottles made? Thank you in advance!

    • Hannah,
      1. Would you think that your bike riders would like to have a complimentary water bottle?

      2. Would such a thoughtful gesture add even more professionalism and organization to your event?

      If your answer is yes to those questions, then you absolutely should gratefully accept.

      It makes no difference that you were not going to buy water bottles in the first place.

      When such an In-Kind donation provides a welcome, useful, and appreciated service, then you run with it—or in this case, bike with it.

      For our Orchestra’s 10K run, a grocery chain donated one thousand bananas for our runners, an In-Kind donation of something we would not at all pay for ourselves.

      That special benefit to our participants was a hit with them. A great deal of good will was generated for the image of the grocery chain. The same will no doubt be true with your complimentary water bottles.

      And, as we did with our banana donor, you should do so as well for your water bottle donor:

      — accept with sincere gratitude. (The shop is already generous with its other donations.)

      — recognize fully and publicly at the value of what the bottles cost retail.

      While in your acknowledgement you will not say how much the donation of the water bottles “saved” you from spending, nonetheless, you can say that such a generous donation, which you understand is valued at $_________, helped to make the bike event a great success, and that the bike riders were very pleased to receive the gift of the bottles from (Name of shop).

  16. Interesting post – I am thankful for the details , Does someone know where I would be able to find a fillable IRS 1024 version to fill out ?

  17. We recently had a corporate sponsor pay for the catering for a fundraising event. We have the receipts and know the amount down to the penny. Since we never directly received any cash, I suspect this is an in-kind donation. It seems that the value of the donation is very well established, as we have the receipts for the exact amount. Do you have any insight on how this should be treated? Many thanks,

    • Greg,
      Yes, you are the recipient of a very generous In-Kind gift.

      Whether you have receipts to the penny, or if you know from other valid references regarding the expense paid for by the corporation, you treat such gifts in the same way: that is, to simply (and gratefully) acknowledge what you “understand” was the expense paid for by the corporation.

      How the corporation claims any benefit for the donation, is entirely up to them. The In-Kind donation could be part, or not, of a claim for a tax break. Some, or all, may be claimed as a business expense. Some or all applied to its PR/advertising budget. And other ways. It’s totally their responsibility.

      Thus, all you should do is acknowledge the In-Kind donation using my example in the article above, which only refers to what you “understand” was the expense paid for on your behalf, and the fact that their gift “saved” you from spending those funds so you could even better carryout your mission.

      The corporation knows how to handle such transactions, and they know that you cannot/should not “certify” an In-Kind donation. Even if you did, it would be of no legal or otherwise applicable worth to them.

      You can only acknowledge the corporation’s generosity in the way I suggest from this posting, and from the example I have provided in my article about In-Kind gifts.

  18. We recently had an Olympic team come to Alaska as a benefit to our Youth athletics program. While here the team did outreach in schools, and conducted their regular training. They also helped us with a fundraising event. We covered all their costs, but made it back and more at the event.
    Rather than house them at a hotel, we housed them with one generous individual – who also hosted the fundraiser event.
    By offsetting the cost of a hotel (appx $150/rm/night, 10 nights, 18 people) and a venue (appx. $5,000) for our event, does the generous supporter qualify as an in-kind donor? How should our letter recognizing their kindness be worded to give them the best tax benefits?

    • Ben,
      That generous donor most certainly deserves all of the credit and recognition possible, and deserved, from your organization regarding the significant expenses you did not need to pay.

      I suggest that your acknowledgment for that support be worded from the example in my article above.

      The possible best tax benefits accruing to the donor can only be determined between the donor, his or her accountant/attorney, and the IRS.

      The best, and only, thing you can/should do, is to cite the approximate expense your organization did not need to pay because of the donor’s generosity — those funds then, being available for your organization to continue to carry out its good work.

      As my article, and the example, make clear—you should not provide an acknowledgment or receipt of sorts officially in the same way as you would recognize a gift of cash or stock.

      Just the value should be mentioned, as you “understand” it, and how that amount “saved” you from spending your own funds.

  19. Thank you for this article. I work for a small not-for-profit and we receive gift cards as prizes for raffles (or competitions). Should these in-kind donations be tracked as revenue in our spreadsheets? Or should they be tracked in some other way?

    • Michael,
      This topic comes up from time to time, and each time it does, I try to glean from the IRS its latest ruling regarding gift cards.

      As I see the issue today, the regulations appear to lump gifts made through gift cards in the same category as gifts of straight cash.

      My guess is that it would be appropriate to acknowledge a gift made with a gift card in the same manner as an organization acknowledges gifts made by gifts of stocks, cash, check, credit card, or on-line cash transfers.

      As far as I can tell, these regulations are still “proposed,” but this appears to be the only guidance there is currently, and I would suggest that you act in that way.

  20. A question for the community regarding LOGOS –

    My organization gets both in-kind and cash gifts for a certain program, and a lot of them (great!). But, with so many donors to acknowledge and so many logos to include — how does one order things on the program materials?

    Standard practice is of course by amount/alphabetical, but…does one mix the in-kind and cash support in the “logo soup”?

    Or somehow design it so the in-kind support is on another, separate line where it is ordered amount/alphabetical(not always easy to do, design-wise?

    I know this is a good problem to have, but I want to be sure everyone is acknowledged appropriately. Thoughts are appreciated!

    • Kate,
      A happy problem indeed.

      And one I suggest you can make even more pleasant when it comes to mixing your cash and In-Kind donations “soup.”

      But first, logo-intense is how your donor recognition practice seems to operate.

      Why not simply list the names of the contributors and forego the logo? It seems to me that various logo sizes, colors, legibility and other factors would make your donor “soup” murky.

      Sticking with donor names only, we made it simple at The Cleveland Orchestra during my twenty years there as D of D, as I was the one responsible for donor recognition overall, and for specific listings on walls, Annual Reports and weekly concert programs. Maybe your program materials could be produces in the same way.

      For example, each year, our Annual Report’s Donor Recognition page listed all of the different dollar categories we felt were appropriate to the range of donations we received. Such a listing of sizes of donations will naturally differ from one organization to another.

      The heading of the listing made clear that the respective donors listed reflected their total cash support to our Orchestra for that given Fiscal Year, including Annual Fund, payments of capital and endowment pledges, sponsorship, underwriting, the deductible portion of Patron tickets they bought for special events, and the Fair Market Value of In-Kind donations.

      That way of combining all of the cash and in-kind values in one amount per donor, and blending cash and In-Kind “Fair Market Value” (FMV) donations overall, was received with appreciation by our donors.

      There was never a complaint or comment regarding the commingling of cash and In-Kind. The FMV donation of a printing company producing our Annual Report for say, $15,000 was right at home and comfortable in alpha order with the “XYZ” company giving us the same amount in cash.

      There should be no problem in coming up with a FMV or a “what it would have cost you retail” general amount for any In-Kind donation.

      If you must, or want to continue the logo publication for recognition, you can do so with the combination process as I have described for cash and In-Kind donations..

  21. We received a donation of $69K from Second Harvest to help pay for capital improvements at one of our St. Vincent de Paul facilities. The money was paid directly to the contractor. Is this a In-Kind donation?

    • John,
      Absolutely, it is an In-Kind donation of the very best kind.

      Second Harvest (if the organization desires), should be recognized in every possible way, and its key officials would be featured guests when you have the celebration ceremony/reception upon completion of the improvements to your facility.

      Why SH, itself being a non-profit organization, did not contribute the 69K directly to your SVdP organization is, of course, not clear to me.

      Depending upon IRS regulations, such a donation would be truly such for SH were it given to you, then to have you in turn pay the contractor. SH might have been entitled to certain benefits that way, insteadof simply paying a commercial invoice.

      If such opportunities come up in the future, I suggest that your respective attorneys and accounts determine what is best for all parties regarding those applicable IRS rules.

  22. we recently had an event and the catering company gave us an $850 discount. Would the $850 be considered an In-kind donation?

    • Trish,
      Yes it would.

      And you can acknowledge in the same way the example suggests in my above article.

      Always use the “we understand” words when it comes to citing what the caterer charged in the first place, and then how the caterer “saved” you from spending $850 so those funds could be freed up to do your organization’s good work.

      The “we understand” also helps if, by chance, the original total cost as given to you by this caterer, was measurably higher than another caterer’s bid. That would mean that the true Fair Market Value (FMV) would be in question, so the “we understand” reference to the cost gets you away from sometimes fuzzy FMVs, something the caterer will need to justify with the company’s accounting procedure and its tax specialist.

  23. Thank you for the information on this site! Our non-profit is setting up an online auction site for the first time. We have not had in kind donations before so I am drafting a letter/receipt for the donors. Our first donors have donated stays at their hotels, B&B, and retreats. I have two questions: 1. Is your example phrasing above in the “Sample Acknowledgment for an In-Kind Gift” sufficient for this type of donation? And, 2. Are the people who win the item on the auction site with their high bid “donating” that cash to our organization – do they also receive a receipt? Thank you.

    • MacKenzie,
      To your No. 1 question, yes, I suggest you use that format and apply every time the expression, “we understand,” when it comes to what you understand is the actual Fair Market Value (FMV) of the items donated. It is up to the donors of such GIK to justify whatever FMV they might claim when working their tax reports.

      No. 2 question could have your acknowledgments cite, again, what you “understand” the FMV to be of a particular item if a donor bids more than that amount. That amount paid by the bidder is generally eligible for a tax deduction. Here again, the true FMV of the premium, from which they base the amount above as a contribution, is always in question. It’s something which your organization cannot certify.

      You can acknowledge that there may be a tax deduction available to them for the amount above the FMV bid requirement, according to the applicable rules of the IRS.

      In addition, here are a few resources which directly address your questions.

      — IRS
      Charity Auctions

      — eHow
      Are auction items at a charity event deductible?

      — Irving Tax & Financial

  24. We are considering a GIK to a large university. The appraisal of the GIK was over $4 million. We understand we cannot take any tax deduction for this GIK but what would be a reasonable expectation from the University as recognition for our contribution. To date, they have put nothing forward and in fact want to shuffle any work required to meet HIPAA off to a for-profit company once they receive the gift! We are just not quite comfortable with what they have done or not done to date. Thank you

    • Susan,
      The type of GIK, how it will be used by the university—the value of that GIK to the university, are the key points to address first, as I see them.

      How this all relates to HIPPA, and to the involvement of a (commercial) for-profit, are obviously factors well known to the university’s development officials. And they should be explained to you.

      From your perspective, you are considering making a very major gift, and it appears the university is willing to accept the gift. I hope they are not blind to that fact, and not find themselves far too embroiled in policies and other entities to be supremely grateful, and give you very public recognition for the appraised value—what your GIK would have cost them “retail” to pay for the GIK.

      From prominent mention in publications of all sorts, given a naming designation for recognition, etc., all such expressions of appreciation are certainly to be expected.

      It depends from where you understand that you cannot take a tax deduction. While the university can only say that it “understands that the value of the GIK is $ _________,” perhaps from the official and accredited appraisal, you should obtain the exact ruling from your attorney or accountant for any tax break, be it from a charitable point of view, or relief as a business expense.

      How your GIK fits with HIPPA regulations, should not at all directly affect you as the donor. But, I agree, and do have discomfort, regarding the entry of a for-profit in the transaction. Yes, it is quite common, especially for universities, to have working and legal relationships with for-profits for say, research and development. However, I suggest you take care to insist on total follow-through to the ultimate use of your contribution. Watch for any possible personal or business gain which could compromise your gift.

      If the university earnestly wants your GIK, then they should be willing to accept any of your reasonable conditions for its use. And to certainly to satisfactorily answer all of your questions.

      Through what appears to be something short of a financial and policy muddle, the university should go back to the basics and reinforce their understanding of the word — Gratitude.

  25. Do you have to put tax ID number on an in king letter?

    • Pamela,
      From what I know, it is not necessary, unless asked. At our Cleveland Orchestra, is was hardly ever requested. Only by community foundations, and other such entities. Never GIK donors.

  26. Tony, our small arts center holds a “Dining for the Arts” event where 10-12 individuals host a dinner in their home at various times over the summer. We have a sign-up event where guests then sign up for the dinners. The hosts set their own amounts (varying between $50-200 each). The guests then pay the arts center that amount. For the first time, someone has asked for a donor acknowledgement letter. I don’t know how to do that except calculate the FMV of the dinner, which means putting the generous host through a time-consuming exercise six months after their event, and then letting the guest know what amount is deductible. Since we are so small, I guess we’ve assumed that people know they are getting a nice dinner to benefit the arts center and don’t care as much about the deduction for any additional amount over what the dinner might be worth. Otherwise we’d have to ask each host to give us the FMV as they are putting together their menu for the sign-up event, when they likely have little idea of what the dinner will cost a couple of months in the future. Any advice you might offer as to how we acknowledge the contribution of the guests? We have not previously acknowledged them.

    • Lori,
      My wife and I just talked this this situation over as if we were going to produce and present a donated lasagne dinner to be in our home on March 20. Today is February 1.

      We have invited twenty people, and they are in the process of sending their checks to your office, the checks made payable to your organization. The donation amount is $100 per person.

      As you have already received some checks, and more will be coming prior to March 20, there is no practical way for you to promptly acknowledge any of the checks you will receive before the pasta sauce settles after March 20, so my wife and I know how much we spent, i.e., providing the Fair Market Value deduction for each and every $100 paid to come to our dinner.

      On the other hand, each $100 check coming in to you must be acknowledged, so how do you keep the patrons from thinking that the entire $100 is indeed fully tax-deductible? You are obliged to let them know you received their checks, so how are the acknowledgments worded now?

      Plus, Joyce and I could find it inconvenient and not too practical to take the time to come up with the FMV of each dinner, not to mention needing to provide documentation to you via receipts, etc.

      So, ten to twelve hosts, and maybe each having about twenty or so guests, does make the practice of providing the FMV of each dinner to each guest a nightmare of sorts when you might be involving over 200 patrons of the dinners.

      You will need to do so for the one so far asking. Maybe only on demand.

      Maybe a way out of sorts can be gleaned from the following webpage of the IRS and another idea I have.

      Of the eight tips listed, here is no. 7 in part:

      7. To claim a deduction for contributions of cash or property equaling $250 or more you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.

      Because the IRS rule allows for some space regarding the under $250 reporting level, maybe you can arbitrary come up with a factor/number to be applied to all dinners’ donations, such as say, $25 to be the FMV across the board.

      Or, if the dinners would have considerable disparity in regards to the hosts’ costs, you might come up with such a FMV considering each type of dinner from each of the hosts’ advance estimates. In our case, for example, my wife and I could give you a reasonable esteem far in advance. We could probably tell you that for each guest donating $100, it would cost us $25. That way, as each check comes in from each patron for any given dinner, you can then and there let them know how much of the amount they remitted is tax-deductible.

  27. Great information! We are a fairly new nonprofit. A website developer made our website and discounted the price from $2000 to $450 because we were nonprofit and as a contribution to us. What’s the proper way to acknowledge this “donation”? We would like to send a written acknowledgement while ensuring we stay within the guidelines! Thanks in advance for your response!!

    • Neeta,
      Use the sample acknowledgment I have provided in my article above. Work your particular payment/donation to the way I suggest. Take a good look at it. It is made to order for your needs.

      But, in addition, I will give you my way of seeing what you need.
      Because you are paying a portion of the website work, with the balance being given to you as an In-Kind donation, you may want to consider saying something along the following lines, should you get the developer’s invoice in hand:

      — “Enclosed is our check in the amount of $450 as partial payment for your welcome, appreciated and excellent work to create our new website.

      (Or, the $450 payment may be made in a separate letter. If so, simply adjust the language accordingly when you acknowledge the In-Kind portion of the total charge.)

      We understand that the full cost to us would have been $2,000, but your generous and thoughtful In-Kind donation of the $1,550 balance greatly relieves our expense budget, and even better, allows us to use those funds to help carry out our organization’s good work.” —

      Neeta, something like that, so you do not certify the value of something which you really do not have an idea, but rather to acknowledge what you “understand” from them to be the value.

  28. A generous donor paid $20,000 in catering costs for a fundraising dinner my organization put on. The donor has the receipt and reported the amount to us. Can we send them an acknowledgement letter stating that their in-kind contribution has a fair-market value of $20,000?

    • Matt,
      The Fair Market Value “FMV,” would be so stated as far as what the caterer charged in writing on the receipt put into the hands of the generous donor who paid the bill. You need not say much more than what I suggest in my article, which is to let the donor know how much your organization “saved” from spending that amount, so you could use that $20,000 to do your good charitable work.

      In the future, consider for example, that the donor could send a check made payable to your organization in the amount of the dinner charge. In turn, you send your organization’s check in the same amount to pay the catering bill. Perfectly legal. Your donor then has all of the tax benefits allowed by the IRS for the cash contribution—which allowed for satisfying the donor’s intent to pay for the dinner.

      Otherwise, the donor must work out any possible tax break with a professional, according to IRS rules, regarding In-Kind donations. You just take great care so as to not “certify” anything of a value which is not exactly known to you.

    • A hotel has quoted me a price of $600 a day for a banquet space for an upcoming festival my company runs. I want to ask them for an in kind donation of the space. Can they still offer me the donation even though they sent me a quote via email?

      • Nicholas,
        The initial quote is a stand-alone, routine, presentation of the cost of the space to you or to anyone. It is apparently what the hotel considers as the “market value” of the rental space. It means nothing to have them tell you the cost, then to have you subsequently look to them to donate the space.

        From there, you can work your presentation to the hotel seeking a donation of the space for the time you need—asking for their In-Kind contribution.

        If you have good luck, perhaps the full charge of $600 will be donated. Or, maybe they will reduce the rate. Either way, full or partial, any In-Kind donated value should be gratefully acknowledged in the way I suggest in my article above.

        You do not certify the value, as much as you simply state that you “Understand the value of their In-Kind donation to be $ __________, which allows you to use those funds, which you need not spend, to help carry out the good work of your organization.”
        Something along those lines.

        Good luck in getting the donated space.

  29. A member of our non profit organization rented two spaces for her business, she has graciously let us use one of the space. The space cost $100.00 per month, she is not charging us for the space and is requesting a letter at the end of the year for $1200.00 that she is paying for renting the space. Can we send this member an in-kind donation letter?.
    Thank you.

    • Linda,
      The donation is indeed an In-Kind donation.

      I suggest that your letter of acknowledgment be crafted in the way I cite in my article above—that the generous donation of space “saves your organization from spending ….”

      You cannot issue an acknowledgment in the same way you would cash.

      Any tax break sought is totally up to the donor.

      However, since she is paying for the space, and in turn, giving it to you, the generous lady could have you pay the monthly cost to her, and she could then send in a like amount donation to your organization. That way, she gets a true tax-deduction as the IRS allows. The downside is that she will need to report your payment of rent as income. Maybe that’s something she could discuss with her accountant.

      By the way, before you enter into this seemingly good deal for your organization, there are some things to consider. Following is a little essay I was thinking of posting sometime on our website. It is not fully edited, but the main points should be useful to you. It’s not the proverbial “Looking a gift horse in the mouth,” but even given free things sometimes to have strings attached.

      — Donation Of Office Space To A Non-Profit Organization

      “We have been offered a generous donation of office space which we sorely need.”

      Good news, but, before you go too far, I would like to review with you some conditions you and your colleagues might not yet have addressed.

      From my experience operating my development office for a time in a donated space, here are my comments:

      Make certain that the space has a real connection with your needs. I suggest you make more of an inquiry — of exploration, if you will — because you will need to know how many square feet of space will serve your needs, what layout is best for you in which to operate most efficiently, and what basic connections you will require for your computers, telephones, copy machine, etc.

      You don’t want to obtain donated space that you later find you cannot possibly use. You don’t want to be in a position where you must later leave what turned out to be an undesired space donation.

      You must think about the building owner’s insurance responsibility — and especially yours — regarding accidents to your staff, your visitors, and damage to your own installed property. Too, security to protect people and property — yours and theirs — must be considered. And, because of the way the building is designed and how other tenants might operate, must your regular business hours and your special schedule of operation be the same as theirs? You need to know that.

      Will heat and electricity be provided, or will you be expected to pay some sort of estimated expense? Will those utilities’ costs be fixed by meter to the area you use, or does the heat, water, electricity, etc., function overall to all tenants? How will that expense be shared? How much will it cost, in any event, and can you afford it?

      Equally important, is that the donated space be located in an area best suited to the convenience and access of those whom you serve, your staff, and your visitors. Will there be parking accommodations and will there be a charge for parking?

      I believe that the many explicit conditions, procedures, and the inevitable surprises — good and bad — surrounding donated office space can be best addressed when you have the opportunity to personally meet to talk about the possibility with the people considering the donation and to have an opportunity to personally and thoroughly inspect the facility to ask questions.

      Of course, one of the biggest issues to resolve, is to have a clear and binding understanding regarding when you intend to vacate, or when you are required to vacate — with protection in between so that you are not evicted.

      Maybe some of the points cited above may be worth looking into.

  30. Non-profit fitness center donates (its own) gift certificates to other non-profit organizations. How is the transaction recorded when the gift certificate is issued? Redeemed? Is this a single transaction resulting in in-kind when issued?

    • Heather,
      To my simple way of seeing things, the issued gift certificates have no bearing on the fitness center to claim the cost in any way — unless the gift certificates are redeemed. It matters not how many gift certificates there are out there in whose hands, unless and until they are claimed for the services offered.

      When redeemed, the gift cards allow a contribution of services, which are not tax-deductible, but the fitness center’s accountant may look into the possibility of claiming the cost as an advertising or other business expense.

      With giving a gift card, the fitness center is donating a service, which is not tax-deductible.

  31. We have contributors who purchase gift cards for the stated full retail value. For example, a Target gift card for $50.00. The gift card is then passed along by us to one of our participants. Since the donor has purchased the card for a very specific monetary value is this the same as a cash contribution? It seems that the only difference is that the contribution is in the form of an electronic payment versus a check or cash. Am I correct?

    • Jack,
      I believe you are correct.

      I have been observing the changing IRS rules for a number of years regarding gift cards. Over that time, from the IRS website, one could read about “proposed” rulings.

      As I see the issue today, the proposed regulations appear to lump gifts made through gift cards in the same category as gifts of straight cash. 

      My guess it that it would be appropriate to acknowledge a gift made with a gift card in the same manner as an organization acknowledges gifts made by cash, check, credit card, or on-line cash transfer.

      As far as I can tell, these regulations are still “proposed,” but this appears to be the only guidance there is currently, and I would go that way.

  32. I work at a small church that does many local mission projects. Members often give me receipts for things they’ve donated – for example, groceries for our lunch program. In our accounting software I list it as an in-kind gift of $0.00, and in the comments section I type in the details of the gift including the total of the receipt(s). I keep the receipts in a file with my other donations documents. On their year-end giving statements, they can look at each individual gift in the list of all their donations and see what it was and how much it cost, although the total of their in-kind gifts remains $0.00. I do it this way because that’s how the administrator before me taught me to do it… As I have just mailed out the 2015 giving statements, several people have asked me whether their in-kind donations “count.” I am trying to understand: is there no tax benefit for them to make in-kind donations? Is there no way for them to claim these donations on their taxes? Am I wrong to document their gifts the way I do? Thanks for any clarification you can give.

    • Julie,
      Your donors of In-Kind items must themselves determine what, if any, tax benefit is possible to them. That’s something they work out with their professional, or by consulting IRS regulations to see if what they gave In-Kind meets a minimum value requirement and other criteria for tax relief.

      You do not issue In-Kind contribution declarations from the church, regardless the amounts spent from receipts given to you. Better the donors keep the receipts.

      In the instances appropriate, you can send them letters citing the value, in dollars, which so much relieves the needy receivers of the food from having to come up with, i.e., the money value to them.

      Since a church uniquely looks to its members for regular/weekly stewardship contributions, I suggest that you work to keep separate any respective In-kind donation. Make the latter “count,” but not to be actually counted, in what is necessarily their offerings as members of the congregation. You do not want to have a tilting of In-Kind donations resulting in less cash support. (Other non-profits are wise to total cash and In-Kind gifts to count as a supporter’s annual giving, but I think a church should account for In-Kind donations in a different manner for reasons as cited above.)

      You can enter In-Kind donations in your software in any way suitable to your needs and understanding, doing so perhaps with suggestions from your annual, outside, auditor.

      —Tax break possibilities for In-Kind donations must be explored by the donors.

      — You simply refer to any such values in the way described in the article and from this reply.

      — Gratefully compile the values and refer to them as separate support, keeping free and clear what you must strive for to achieve maximum cash offerings. Such In-Kind donations must be in addition, not to count in total.

  33. The website you are looking at was designed as an in-kind donation. However, the owner of the design company paid his staff a considerable amount of money to do the work. Is he allowed to deduct the wages of his workers?

    • Linda,
      No, he cannot.

      Wages are what he pays to his employees for any and all work they do.

      That he chooses to donate the work, has no connection to tax breaks for wages he must pay.

  34. I volunteer with my sons PTO. Teachers gather gift cards every year to put in gift card baskets to be auctioned off to raise money for the schools one and done fundraiser. They do this on their own, and gather gift cards from donors that they contacted. No gift cards ever come through the PTO, so we have no idea what is donated or which cards are put in what baskets. This year we had a donor ask us for a receipt for a $50 gift card that they donated to one of the teachers so they could claim it on their taxes. Since we had no knowledge of this card, or the amount, and it wasn’t donated to the PTO, but to the teacher, should we have to write them a receipt? This card never came through our books. The money made from the gift card baskets was donated to the school, but we cannot confirm how much was made from that particular one. This is how the teachers choose to raise money. We do not accept the gift cards.

    • 1) On the donation receipt side, I would give DONOR #1 of the gift card a receipt, especially for $50, for good donor relations. The only reason it didn’t come through the accounting is because it was not tracked. I think you need to set up a system to track this and you won’t have to take the donor’s word for it in the future. Perhaps give the teachers a charitable contribution receipt that they can give to the donors of the gift cards

      2) You are giving the recipient of the basket something of value in return for a contribution. That Donor #2 need to know the value of the basket so that they can deduct the excess, if any, of the amount paid over the value. That’s the true charitable contribution side for the recipient of the basket. As far as the gift card being given to the teacher and not the school, I don’t think that’s the correct way to look at it because you need to look at the underlying intent as to how the donor intended the gift card to be used to fundraise for the school.

      3) On the nonprofit accounting side, you need to treat the gift card as an in-kind contribution and the related expense of providing that as part of the basket will offset it for a net P&L impact of $0. I think the gift card would be treated like a gift certificate and here’s the rule for that from the AICPA Guide for Not for Profits.

      From the AICPA NFP Guide:

      As discussed in FASB ASC 958-605-25-20 , NFPs may also receive items, such as tickets, gift certificates, works of art, and merchandise, that are to be used for fund-raising purposes by transferring them to other resource providers (the ultimate resource provider or recipient) during fundraising events. Those gifts in kind can be linked to asset transfers from the original resource providers to the ultimate resource providers (recipients) because they are, in substance, part of the same transaction; those gifts in kind should be reported as contributions and measured at fair value when originally received by an NFP. The difference between the amount received for those items from the ultimate resource providers (recipients) and the fair value of the gifts in kind when originally contributed to the NFP should be recognized as adjustments to the original contributions when the items are transferred to the ultimate resource providers (recipients).

      For those who need more help, go to or look at IRS Pub 1771 for charitable contribution substantiation. It’s a well-written publication.

  35. Our PTA puts on an auction each year and I was asked if food providers may get credit for an in-kind sponsorship if they sell us the food below cost?

    How would I handle this? Any information would-be helpful as I’m new to all of this.


    • Theresa,
      Ask the food providers to give to you the amount you will be saving.

      That is, what is the difference between what you will actually pay them, and what is the amount you would have otherwise needed to pay “retail?”

      Then, that amount should be the “paper credit” you give to them for public recognition.

      How that amount fits into any one of the levels you will show in the program for the evening and in other methods of recognition, is up to you.

      But, I suggest you treat the savings as cash–in exactly the way I describe in my article above. However, you do not give them anything in writing which suggests they gave cash–only the savings they made possible so you could make more net profit for the event to allow your PTA to do its good work.

  36. Our non-profit is the happy recipient of free snow removal each year from a local landscaping company. Since this is a service rendered rather than a product given, is this a case where your statement, “Using the advice given in my article, in such instances you can give the donors of services a thank-you which, if they give its value to you, has you “understand” that they donated $ ___________ for services which they would otherwise require payment in the marketplace. Or even, if applicable, that their donation of services in the amount of $ ___________ allowed you to not spend that money so you have more funds to carryout your mission.” should be used in a thank you letter?

    • Mary,

      Exactly so,
      That is the way to go.

      Let it snow, let it snow, let it snow,
      That you need not pay for its removal is so very nice to know.

  37. I just received a quote from a design firm asking that the terms of a contract state that “the cost of the Project is $3,000 – $2,000 to be paid in cash and a $1,000 donation receipt to be issued to the contractor.” This seems to contradict the information contained in this article. I don’t think I should approve this contract. Any opinions?

    • Bill,
      Sounds to me like a good deal, one not to pass up if the project will benefit your organization, and to not turn down what appears to be a generous donation.

      I suggest that you simply compose a note attachment to the contract using the same language as I have provided in the article—where you give appreciation for the In-Kind donation of services which they valued at $1,000 as money they saved you from spending so you have those funds available to pay the expenses of doing your organization’s good work.

      • What if, in this situation, the organization pays the contractor the full $3,000 he usually would charge for this work. Then the contractor makes a $1,000 cash donation and gets a receipt like any other cash donor? Does that make it all cleaner (and closer to what the contractor was looking for, sounds like) or does that look fishy to the IRS?

        I have heard of places doing this for a venue rental that was donated- had the organization pay for the rental what is usually charged, and then the venue made a donation back to the organization.

      • Sara,
        Both transactions are common, and they are surely legal. Nothing is fishy either way.

        It’s what the donor chooses that counts—in this case that the donor wants to make a $1,000 contribution one way or the other to the non-profit organization from the project expense of $3,000:

        1. Be paid $2,000 and contribute the other $1,000 as an In-Kind gift, or …

        2. Be paid the $3,000 then, in turn, write a check to the organization for $1,000.

        Either way, the non-profit benefits. Either way the donor gives the non-profit a $1,000 contribution legally.

        However, the contractor/donor would look to its accountant for which of the two methods is more favorable internally to them:

        — that the contractor would be more tax-liable to the IRS for $3,000 of income, rather than $2,000 …

        — that since there is no tax relief to the donor for the $1,000 In-Kind services donation, perhaps it would be determined that the amount could be claimed as a business expense.

        Thus, you see why in my article, that I stress that the non-profit only be concerned with giving “paper credit” and public recognition for In-Kind gifts, and that it naturally provide a written certification of date-received and amount of cash for those types of donations.

        Whatever IRS-related benefit the donor can obtain, is something entirely up to them to determine internally and through their tax advisers.

        Non-profits must take care to not certify what is not theirs to certify.

  38. Great article! A member of our gala host committee donated her company’s software to our organization, valued at $3000. She assumed it would be equivalent to a usual gala sponsorship (and include tickets to the event). I said no, based on my understanding of the in-kind donation rules, but I know they were disappointed. What would be a good way to acknowledge these types of donations without putting them into the same category as cash sponsors?

    • Sarah,
      Saying “no” to a benefactor’s request is just about the hardest thing to do, and something we almost never should do. Let’s see how you can either stick with what you told the donor, or make some sort of accommodation.

      I do not know how the donation of the software was meant to be applied to your organization:
      — for overall and general operations,
      or to expediently handle the myriad details of the Gala.

      (1) If the generous software donation was given in fact to benefit in total your organization’s operations, and if you had such an expense in your budget, then the company saved you from spending $3,000. (Even if the software program was not in your operating expense budget in the first place, the software donation allowed your organization to greatly improve its operations.)

      (2) On the other hand, perhaps the donation of software was prompted by, and applied mainly to, the operations of the Gala. If so, and were you not planning to spend the money for such software, that nice donation was not part of the Gala expense budget, thus was not an underwriting donation which relieved you of an expense. If such an expense was in your Gala’s expense budget, then it was relieved by the donation, and the company certainly is a sponsor. They are recognized in that way, and they receive the applicable quantity of complimentary tickets.

      Thus, when it comes to a special (annual) event Gala, sponsors can/should only count when what they donate directly and positively impacts the bottom line of the Gala—to achieve a significant net profit. While what the company gave to your organization is a major donation, it may be doing nothing to directly help what a Gala must be all about—the making of money by paying less via underwriting donations for what is needed.

      That is how I see the way to respond to the company’s request from about every view I can picture.

      To my way of thinking, there is no In-Kind Donation ruling which applies here. Reading my article again should reinforce how you only recognize such In-Kind donations. No IRS rules apply when you just issue internal and public “paper credit” in the amount you would have spent were you have paid “retail.”

      In my opinion, you have far more of a donor relations issue than anything else.

      If scenario (1) applies, then you could consider giving a reasonable number of tickets to donor of the software. What is reasonable, when you need profit and may have a few other comps to give? Four freebies is what I would do.

      Sorry for the comprehensive reply, but I simply was not sure how the software donation fit, or did not fit, with the direct and explicit operation of the Gala. I had to cover both bases.

  39. Very informative article and timely for me. I just designed a new logo for a non-profit as a favor to a friend. I am an artist/designer by profession, and had I been hired to do this I would have charged between $500 and $1500, depending on time and number of comps required. Although what I offer is usually considered a service, the end result is a tangible image that will be used in a number of ways for communication, public outreach, advertising, etc. So, is it tax deductible or not?

    • Phyllis,
      Generous of you to donate your creative/artistic services.

      Unfortunately, the IRS rules you cannot claim a tax deduction for donated professional services. Out-of-pocket expenses, perhaps and case by base.

      Artistic/creative services used in the ways you describe for your good effort, could as well apply to fund-raising brochures, annual reports, donor recognition displays, etc.

      I truly understand how you feel regarding how your work, being tangible, may help with mission furthering, fund-raising, etc. But, such an exemption, hard enough to measure, would be unfair to the other donors of professional services, such as painters, electricians, carpenters, and others whose professional services are donated In-Kind.

      As I read and understand the IRS Publication 526, the section, “Contributions you cannot deduct,” there are no exceptions.

    • Thank you for writing this. I own a newspaper and donate a lot of space for community events and organizations. I was recently told my donation of $2,000 in space would not be considered the same as $1,500 cash contributors. They want me to donate my cost to be equal. What are your thoughts on this type of transaction/request?

      • Julie,
        Just as my article states, any thinking and appreciative non-profit, receiving generous In-Kind donations such as yours, should/must give to you public credit for what such space would have cost them “retail,” should they have purchased the space.

        Naturally, your In-Kind donation cannot be considered the same as cash, relative to IRS regulations, but any smart non-profit would recognize your In-Kind donation in the same way they would recognize a cash gift in that amount, i.e., citing your In-Kind donation value among gifts of cash in publications, such in Annual Report donor listings.

        I do not understand how the #1,500 amount enters the picture here, if the space you donate would cost $2,000 to a paying advertiser.

        If the organization to which you refer is nit-picking, bordering on being ungrateful, the organization’s officials have no business telling you what you should declare as the value you attach to the donated space. And certainly, they have no business whatever when it comes to themselves estimating the worth of your In-Kind gift.

        Unless I am missing something, the organization does not know how to show respect and appreciation to its best supporters.

        Have them read the article, especially the ending section, “Don’t Be Unkind to In-Kind.”

  40. Tony, great article! What about for services like food prep by a chef

    • Marcelle,
      Thank you.

      The chef’s food prep time and expertise are not what the chef can declare for a tax break.

      In the IRS Publication 526, it is made clear that no deductions are allowed for donated professional services.

  41. it is my understanding that if someone discounts the rent to a nonprofit that is renting the premises, that in-kind gift is not a deductible donation for tax purposes because it is a contribution of less than an entire interest in that property. Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution.

    • Michael,
      Your understanding seems to be the case with the IRS, but from some reading of related information, there may be options in favor of the owner of the property discounting some rent to favor a non-profit. See the following article:

      As well, enter the key words regarding such a deal into a Google or Bing, or other search. There are a number of other explanations to be considered, such as the one I provided.

      Being a source of non-profit fund-raising information, we are often reluctant to delve too deeply into what are complex legal matters, thus your need for an accountant of attorney skilled in non-profit law.

  42. I was contracted to do work for a non-profit. I had a written contract that was amended verbally (increasing my hours). I was asked to work such event, and my supervisor was to develop a way for me to tally my hours (she never did so I jotted them down on-paper waiting for her to develop a form). In the end I worked a total of 205.50 hours of which they had budgeted only 165 so 40.5 wasn’t. What is their legal obligation to pay me, or can they write me a letter for a donation of those hours?

    • Sorry to say, no legally binding agreement, means no contractual responsibility to pay you.

      It’s your word against hers.

      However, if she admits to the agreement made to you, she needs a good reason why she is reneging.

      If she confirms what you understood, would she do so in the company of someone of authority in the non-profit so her reasoning could be aired?

      If others at the non-profit personally heard of the promise and would confirm your verbal agreement, then you could make an appeal to the board president or other top officials.

      Unfortunately, the IRS will not allow you to declare any value for a tax-deduction based on services rendered—only for applicable out-of-pocket expenses.

      Such a letter would do you no good at all.

  43. Our finance department is requesting the inclusion of explicit language stating the gift-in-kind is not eligible for a tax deduction. Is this required? Is it prudent to be this explicit? If so, are there examples available?

    • Anthony,
      If your finance department is telling you to tell your In-Kind donors that their gifts-in-kind are not tax-deductible, you would be giving false and misleading information.

      Tax deductions for GIK are up to the donors to seek, or not, via the counsel they receive from those who help prepare their annual tax reports.

      My article above relates to only how we publicly recognize such gifts, and in no way do we explicitly give values, and certainly we do not tell such donors that they cannot seek a tax deduction.

  44. So how do you record GIK in your donor database? We have a company who donated $6,000 worth of printing for a fundraiser. We acknowledged this generosity very similarly to what you posted in the article above but have had discussions on whether it is appropriate to list $6,000 in-kind in the donor’s gift record OR should we list the value as $0.01 in Raiser’s Edge and identified the $6,000 printing in the reference field.

    • Laura Jo,
      The article was written to fill what I knew to be a gap regarding how most non-profits acknowledged In-Kind donations. Thus, what I wrote is donor-centered, that is, to appropriately recognize such gifts for what they might have cost “retail.”

      Apparently, that is what you nicely did. And yes, I think you should post that In-Kind value as a “real” donation in your database for that particular donor.

      How the receiving non-profits account for such donations in their financials, is something to which I do not know the answer. Your head of finance and your outside auditor are the ones to consult to ensure that your logging in of In-Kind donations are according to accounting standards.

      However, were you to spend the $6,000 in the first place for printing, and that expense was a line item in your budget, then it seems a rather simple exercise to, in turn, post the value of the In-Kind donation of printing so as to offset the expense.

    • I’ve had a bad experience with gifts of $.01 (or similar) for various reasons – calculating gift averages, LYBUNT SYBUNT work etc. I’m in favor of entering the value of the GIK.

      If you enter a gift type or subtype of “GIK” in your database, you should easily be able to include or exclude the information as needed in various reports.

  45. Our church is non-profit. It is a small church and doesn’t have a lot of cash on hand. As a result, many of the congregants pay for items that the church would otherwise pay, such as gas and repairs for the church can, food for feeding the youth each week, and repairs to the church. Instead of receiving reimbursement for these items, can the amount spent be counted toward tithes as long as receipts are provided to show what was spent?

    • Robyn,
      If many members of the congregation pay for items which would otherwise require the Church to pay why is there mention of possible reimbursement? That exchange is of no benefit to the Church’s required expenses.

      To my way of thinking, it would be far easier, and of direct benefit to the donors, if they made donations in amounts individually related to specific expenses as they came up.

      For example, if a plumber will charge $256.30 to fix a water leak problem, then a Church member makes out a check in that amount, payable to the Church as a bona-fide contribution. The Church, in turn, cashes the check and pays the plumber. The Church member has given a tax-deductible donation.

      Having a member of the congregation directly pay the plumber, has that Church member end up simply with a paid invoice which will do no good for tax-deduction purpose when they file with the IRS. All you can do is to public recognize the worth of the expense, much as I suggest in my article above.

      I think the best, and perhaps only, In-Kind donations you should solicit and accept directly are products and services which are provided by vendors and other businesses; what they themselves sell, provide or manufacture.

      But I see a possible problem regarding the blessing (so to speak) of many members of the congregation paying for expenses, no matter how they do it.

      It’s possible that many of those donors could see their tithing/donating support as being fulfilled when they pay for a needed service. It’s possible you could have an expense of say, $200 paid for, but to have that sum considered by the donor as his or her partial or total offering support, which is otherwise made weekly.

      I would be concerned that in the long term there may actually be an overall lessening of donations if project and service donors are distracted and directed away from making their regular cash offering.

      The Church must make it abundantly (with gratitude) clear of the need to have such direct expense donations be in addition to what the respective member of the congregation would give to the Church.

      Sounds like a “happy problem,” to have so many step up and help with those on-going and emergency needs, but please do review the process for the issues I have raised.

      The last thing you want to hear from a Church member who has additional and meaningful cash-giving ability, is for him or her to say with finality, “But I already paid for this month’s gas bill.”

  46. If a grocery store donates a $100 gift card so that we can purchase refreshments for a group our NFP is hosting, is that considered an “in kind” gift? Can the thank you letter state the value?

    • Jyl,
      Use the suggested acknowledgment from my article.

      That way, you can accurately state that the $100 gift card “saved you from spending that amount.” You are giving public recognition of the value of the card, but not giving any official-sounding donation amount.

      Just avoid what may look like the receipt of $100 in any form for IRS recognition.

      The grocery store knows how to account for such donations, be they as business expense, or for tax-deduction purposes.

      They know that the $100 retail purchase the card commands is higher than their actual cost of the products purchased in hat way.

      That’s another good reason to simply state how grateful you are for not needing to spend $100 for what you required for the refreshments, thanks to the store’s generosity.

  47. I have been tasked with providing in-kind forms to individuals who have donated items to be used as door prizes for an upcoming banquet. I thought in-kind forms were for services rendered only and not item or cash donations. What is correct?

    • Cathy,
      It’s the other way around.

      Services rendered are not allowed for tax-deduction purposes.

      Therefore, there is no point in having a form for such donated services.

      Using the advice given in my article, in such instances you can give the donors of services a thank-you which, if they give its value to you, has you “understand” that they donated $ ___________ for services which they would otherwise require payment in the marketplace. Or even, if applicable, that their donation of services in the amount of $ ___________ allowed you to not spend that money so you have more funds to carryout your mission.

      When you receive cash, a simple acknowledgment citing amount, date and donor, are all you need.

      But, when it comes to the donations of products, such forms provided by the receiving charity are commonplace.

      Forms of that type are readily available from most non-profits. When we donate clothing and other items to such organizations as the Salvation Army, we are always given a form for the items donated to be possibly processed for a tax deduction.

      You can see many such examples from which you can adapt by simply using a search engine asking for — In-Kind donation tax declaration forms — or some such similar language. You can also get hard copies from local charities such as the SA, Heart Association, Good Will Industries, etc.

      Here is a link to one such form, and you will note that there is explicit instruction to the In-Kind donor that he or she themselves must provide to the IRS the value of the items they donated

  48. I work for a non-profit hospital that has agreed to be the presenting sponsor for a volunteer recognition dinner event for a non-profit organization in our community. Their org has asked me to give them an in-kind estimate for their records. The event will be held in our main auditorium, our food services staff will set up the room for 200 guests,complete with table coverings, disposable plates and flatware. We will provide a buffet dinner for 200 guests. I will also create the program and our Forms department will print 200 color copies. Am I correct in assuming that I may consider the fee that we would charge other orgs to rent our auditorium, as well as the cost of the dinner, and the print cost (ink/paper) of the program in my inkind estimate? And, that any labor involved by any staff, i.e., my work to create the program, the kitchen staff setting up the dining area and both the kitchen staff and housekeeping staff cleaning up at the end of the event, is not to be included?

    • Elizabeth,
      Coming from your non-profit hospital, as the In-Kind donor, the receiving non-profit should be given a total In-Kind value of all the tangible items you provide in an amount you can determine for their collective “Fair Market Value.”

      The primary reason the benefiting non-profit wants that In-Kind donation amount is so they can give your hospital appropriate and deserving public credit.

      How they handle the value on their own books is to be according to standard accounting regulations and guidelines, their own finance department, and their outside auditor. You have no place in that process, other than give a defensible accounting of FMV for what you gave them.

      Since what you are giving them has no IRS regulation implications directly applicable to them, their only duty is to, on the other hand, apprise any paying guests of the value of gifts and services they receive—which must be deducted from any patron fee they contributed,

      Since the event is a volunteer appreciation event, there may not any such payments/donations of admission/attendance money. If any do pay, and the rule above would apply, it does so even if what the patrons receive is donated by your hospital. Fair Market Value prevails, nonetheless.

      As far as labor costs are conquered which you will incur, if such work is conducted during normal working hours and is done on occasion, it is your choice to add labor cost estimates or not to the In-Kind total you will give to the charity.

      However, such charges for professional services are not allowed for tax declaration by individuals, and though yours is a non-profit and your gift is not applicable in that way, it could still be a good idea to not add up those program creation, staff setting up, and staff cleaning up charges you might be able to calculate. That is, unless such donated events are common enough that those services are billed in the case of paying organizations.


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