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By Lee Ann Kroon

A super-majority of non-profits agree pro bono and in-kind resources boost their overall gift opportunities and missional impact.

In-kind donations can be one of the most valuable resources for a non-profit. The power of donated supplies, services, and valuable assets, such as land and a building, can boost the financial health of an organization, stretching purchasing resources and enriching the organization’s assets.

Non-profit organizations may realize greater gift potential from donated goods or services than the opportunity for cash gifts. For example, a corporation with a culture of giving may prefer donating its goods or services, especially if it is experiencing inconsistent cash flows. This allows the corporation to still achieve its giving goals.

The accounting for in-kind gifts, however, can be tricky. The valuation process, donor recognition guidelines, and the differences between U.S. accounting rules (Generally Accepted Accounting Principles, or GAAP) and IRS standards add complexity.

Proper Recording of In-Kind Gifts

When your non-profit receives donated goods or services, accounting rules require the gift to be recorded as revenue based on the gift’s fair value as of its receipt date.1  The is consistent with IRS rules which requires the donated good or service be priced at its fair market value (FMV) at the time of the contribution.2 Determining FMV can be easier in some situations than in others. Typically you can determine a gift’s worth in a number of ways – the price you would pay for the same good or service on the open market, obtaining valuations from third-party such as an appraiser, or using industry respected published pricing or rates. Once you have chosen the appropriate valuation methods for of the specific gift type, the key is to apply the approach consistently and disclose it properly within your financial statement footnotes. This applies to both donated goods and services under U.S. accounting rules.

Unlike accounting rules, the IRS requires you to report only donated in-kind goods, which is done annually on IRS Form 990, Return of Organization Exempt from Income Tax. Donated in-kind facility use, rental equipment, and services, such as volunteer hours and advertising space, however, are not reported on IRS Form 990. This is a difference between accounting and IRS reporting.

Information for In-Kind Donors

With respect to the donor, the value of a donated in-kind goods must be determined by the donor for its tax reporting purposes. The benefiting non-profit is not permitted to provide the donor with information concerning the gift’s value. Since the in-kind gift is non-cash, it can be more difficult to determine its value. For example, if someone donated publicly traded stock, it would easier to determine its value based on quoted stock prices. However, if someone donated a painting, a professional appraiser would need to assess and value the gift.

It is customary for a non-profit to send a thank you letter to a donor of an in-kind good or service, including a receipt describing the gift or perhaps special donor recognition during a program or with a plaque. However, the non-profit cannot state the gift’s value.3

There are many nuances in accounting for in-kind gifts, as each type of gift has its own set of guidelines. It is recommended for all non-profits to establish a gift policy which clearly outlines the procedures for the acceptance and handling of all anticipated gift types.


Lee Ann Kroon is Chief Administrative Officer at Axia International. As a CPA with over 30 years of administrative experience, Lee Ann has served as Executive Director, Chief Financial Officer and Controller for non-profit organizations. Axia International, headquartered in Houston, TX, helps non-profits and others boost giving partner reach and engagement, while also freeing valuable time and resources toward their mission by fully managing all aspects of administration.


1Topic 820-30-11 FASB Accounting Standards

2Section 1.170A-1(c)(1) IRC Charitable, etc., Contributions and Gifts

3IRS Publication 1771, Charitable Contribution Substantiation & Disclosure Requirements