What Are In-Kind Donations?
In-Kind Donations are non-cash donations that come in the form of goods or services. Unlike cash donations where funds are transferred to your group, these items must be recorded based on fair market value.
Some examples of In-Kind Donations include goods (i.e. a computer), property rentals (i.e. a meeting hall), professional services (i.e. a web designer) or materials (i.e. lumber to build a bench).
Determining Fair Market Value
The Fair Market Value of an in-kind donation is how much the item, property or asset would sell for in today’s market. For larger nonprofits, getting this number right might require a professional. But for MoneyMinder customers like parent groups, scouts and booster clubs, it’s typically a little more straightforward.
For example, if someone donated a conference space or meeting room, simply take a look at what is normally charged for that property in an open market. Similarly, when goods are donated, it can be helpful to look online to see what price comparable goods are being sold for.
Ensuring IRS Compliance
To ensure IRS compliance, Kindful states that you need to send your donation acknowledgment letters by January 31 each year and should include the following information:
- The name of your donor
- The full legal name of your organization
- A declaration of your organization’s tax-exempt status
- Your organization’s employer identification number
- The date the gift was received
- A description of the gift and the amount received
- Any exchanges your organization provided in receipt of the donation
Sample Thank You Letter & Post Card
Click the image to view a customizable thank-you letter and postcard.