How to Accept In-kind Contributions

An in-kind contribution (gift in kind) is a good or service given to a charitable cause rather than money. This may be something that the charity can pass on to those it serves, something the organization can use for its own operational needs or something it can sell. Read on to learn how to accept in-kind contributions.

Instructions

Difficulty: Moderately Easy

1. Ensure that your organization is authorized by the IRS to accept gifts in kind from individuals or organizations seeking a tax deduction for their gifts. In general, in order for a donor to take a tax deduction, your organization must be classified as 501(c)(3) by the IRS.
2. Insist that gifts in kind be unrestricted so your organization can use it or dispose of it in any way it sees fit. Gifts in kind should become the property of the charity, and any paperwork offered to the donor in exchange for the gift should make this clear.
3. Refuse to accept gifts in kind that are broken or otherwise unusable. It will cost money and time to dispose of these items, which does not help your charitable cause.
4. Determine the fair market value of the gift. Often the donor will know its value; if the donor doesn't know, you will have to research the value or wait until you sell the gift to know its value.
5. Deduct any good or service you provided to the donor in exchange for the gift from the fair market value of the gift. For instance, if someone donates an item for a charity auction and your organization provides the donor with two free tickets to the event, you must deduct the value of the tickets.
6. Provide proof of the value of the gift to the donor through a letter or other written form. If you had to sell the item before knowing its value, you must wait until after the sale to provide this information to the donor, who will not be able to take the tax deduction without it.

Tips & Warnings

• Gifts in kind are an attractive option to donors who may worry that cash gifts will be misused either by the charity itself or by those the charity assists. Gifts in kind, like monetary gifts, cannot simply be distributed to the employees or volunteers of the charity as if it were a perquisite of working for the charity.
• Some individuals and organizations believe that broken items or items they can no longer use will still be useful to a charity. Others unscrupulously unload their "junk" on charities and take a tax deduction.