1. In-Kind Contributions in Nonprofits
Presented By Stephanie Koch
In-kind contributions contribute
to the financial success of
nonprofit organizations.
Correctly managing and
budgeting in-kind
contributions allows an
organization to note what
program areas can be reliant
on in-kind services and what areas need
other means of financial support.
Therefore this series on
financial accountability of
in-kind contributions will be
broken into three sections:
3. 3
An in-kind contribution is defined by the generally
accepted accounting principles (GAAP) as goods or
services provided without any financial compensation
in direct support of an organization’s activities
(“Guidelines for reporting,”). There are thorough
guidelines according to the Statement of Financial
Accounting Standards for what constitutes as a
recognizable thus claimable in-kind contribution. The
contribution must:
-Create or enhance nonfinancial assets
-Provide specialized skills, by an
individual/s who possess those skills, of
which would need to be purchased if
not provided in the form of donation
(Weiner, 2014).
Promises of services and donated goods are required
to be documented as revenue and expenses within an
organization’s balance sheet.
However, it is important to note the differences in a
claimable in-kind donation
and a form of general public
volunteering. For example,
volunteers who are formally
trained by staff members to
provide direct services are not considered a form of in-
kind contribution to the organization. However, if a
licensed therapist from within the community
4. 4
volunteered weekly to provide counseling sessions for a
suicide crisis center, then their time committed would
be considered an in-kind contribution of service.
Mission alignment is crucial for identifying in-kind
contributions as well, of which will be addressed in part
two, receiving and acknowledgement.
Examples of In-kind Contributions:
Donated land
Donated office space for use
Donated computer hardware
and software
Providing lunch for an
organizations’ staff during an
activity
Free labor for re-painting an organizations structure
A licensed teacher providing specialized tutoring
for a child with autism at a local learning center
Free legal or accounting services
Donated items that are given a fair market price
upon receipt which will be auctioned
(Weiner, 2014; “Contribution in kind,” 1996).
Now I know what some might be thinking… Why bother
with tracking your in-kind contributions when none of
the provided goods or services are direct cash in
hand?!
5. 5
Unfortunately, that assumption is
where a lot of nonprofit managers
find themselves in hot water.
Tracking and accounting for all of
your donated services and goods
displays to future donors program
sustainability.
Tracking down all of the in-kind contributions also
provides your organizations with a strong collection
system that will help maintain relationships with donors.
Logging who gave what and when helps strengthen
resource development by providing proper
acknowledgement of donors and having a formal
structure for soliciting future funds. Lastly, and if not
most importantly, recording in-kind contributions
creates financial documentation that is often
requested and required by donor organizations
(“Guidelines for reporting,”)
What is the benefit of recording projected in-kind
contributions?
The concept of outlining projected in-kind contributions
is to identify what areas of a program will need
monetary funding in addition to the hypothesized in-
kind goods and services. This type of accounting helps
managers identify holes within the budget and devise
plans that will help steer the organization towards more
income (“Guidelines for reporting,”).
6. 6
PART ONE ACTIVITY
1.) What are some current examples of in-
kind contributions that your agency
has received or solicits?
2.) How are these contributions
acknowledged and managed?
3.) If your organization currently does not
accept or receive in-kind donations,
what kinds of services could you see as
beneficial for the financial
sustainability of your agency?
