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Tracking In-Kind Donations for Nonprofits: What to Know

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In-kind donations play a vital role in helping nonprofits fulfill their missions. After all, they provide goods and services without the need for financial expenditure. From donated supplies to volunteer-provided expertise, these contributions significantly expand an organization’s resources and potential. However, to maximize the value of each contribution and ensure compliance with regulations, effectively tracking in-kind donations for nonprofits is a must.

In this guide, we’ll explore the essentials of tracking in-kind donations, offering actionable insights to streamline your organization’s processes. This includes:

In-kind donations have the potential to bring a nonprofit’s fundraising to new heights. Accurate tracking not only helps maintain transparency with stakeholders but also aids in recognizing and appreciating the generosity of donors. Read on to find out how you can do so!

What are in-kind donations?

In-kind donations are non-monetary contributions provided to nonprofit organizations. Instead of giving funds, donors (individuals and companies alike) offer tangible items or professional skills to support the organization’s mission.

Types of in-kind donations include:

  • Goods or products (examples: technology, office supplies, clothing, rental space, or food items)
  • Services or expertise (examples: marketing, IT, or legal services, administrative support, etc.)
  • Gifts of stock, bonds, or securities

All in all, in-kind donations help nonprofits save money, allocate resources efficiently, and expand their capacity to deliver services.

The importance of tracking in-kind donations for nonprofits

Tracking in-kind donations is essential for nonprofits for several reasons, including compliance, transparency, and maximizing impact. Here’s a closer look at why it’s so important:

Financial Accountability and Transparency

Nonprofits are often held to high standards of financial accountability by donors, grantmakers, and regulatory bodies. Properly tracking in-kind donations ensures that the organization’s financial records accurately reflect the total value of resources received. This transparency builds trust with stakeholders and demonstrates the nonprofit’s ability to manage resources responsibly.

Tax Compliance

For both the nonprofit and the donor, tracking in-kind donations is critical for tax purposes. The IRS requires nonprofits to maintain detailed records of all donations, including non-cash contributions, to remain compliant with tax regulations. Accurately valuing and recording in-kind donations also allows the organization to provide appropriate documentation for donors who wish to claim tax deductions.

Program Planning and Resource Allocation

Tracking in-kind donations gives nonprofits a clear understanding of the resources they have available. This insight helps with effective program planning and resource allocation, ensuring that goods and services are used where they’re most needed. It also highlights gaps in resources, enabling nonprofits to seek additional support strategically.

Donor Recognition and Stewardship

Recognizing and appreciating donors is a key aspect of fostering long-term relationships. By accurately tracking in-kind contributions, nonprofits can properly acknowledge the generosity of donors, whether through thank-you letters, public recognition, or impact reports. This recognition strengthens donor loyalty and encourages future support.

By implementing robust systems to track in-kind donations, nonprofits can ensure compliance, enhance donor relationships, and make informed decisions to advance their missions effectively.

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5 steps for tracking in-kind donations effectively

Understanding the specific process for tracking in-kind donations is vital for nonprofits to ensure accuracy, compliance, and efficiency in their operations. Feel free to follow the steps outlined below to manage in-kind donation tracking from start to finish.

1) Track your in-kind donation asks.

Keeping a record of in-kind donation requests ensures that nonprofits can manage their outreach efforts effectively. For the best results, this involves documenting:

  • Who was asked for a donation (specific individuals, businesses, or organizations).
  • The specific items or services requested.
  • The date and method of the ask (e.g., email, phone call, or meeting).
  • Any responses, follow-ups, or commitments received.

Overall, this step helps nonprofits stay organized, avoid duplicate asks, and track progress toward meeting their resource needs. It also provides valuable data for future planning, showing which requests are most likely to be successful.

2) Create an inventory of donated goods and services.

Once donations are received, they should be cataloged in an inventory system, likely using your donor or fundraising database. For the best results, this involves noting:

  • The type of donation (e.g., goods, services, etc.).
  • The quantity and condition of donated items.
  • Any restrictions or specific terms related to the donation’s use.

Maintaining an inventory ensures that all in-kind donations are accounted for and can be allocated appropriately. It also helps prevent waste or mismanagement and allows the organization to quickly identify available resources when needed.

3) Determine the Fair Market Value of each in-kind gift.

Despite in-kind donations being non-cash gifts, it’s important to note the estimated value a good or service provides for your organization. For this, it’s generally recommended to determine and record in-kind gifts by their Fair Market Value.

Fair Market Value (FMV) is the estimated price the donated goods or services would fetch on the open market. This step involves researching comparable values or consulting with professionals for services. For example:

  • Use retail prices for goods.
  • Seek professional appraisals for high-value items or unique contributions.
  • Refer to industry standards for services like legal advice or graphic design.

Accurate valuation is crucial for financial reporting, compliance with tax regulations, and demonstrating the impact of the donation. FMV also ensures transparency with donors and stakeholders, making it an invaluable step in the in-kind donation tracking process.

4) Record the donation in your CRM.

In order to maintain accurate accounts of all donations, in-kind and monetary alike, it’s important that your team records the donation in its CRM. After all, a nonprofit’s Constituent Relationship Management (or CRM) system should include the following details:

  • Donor information (name, contact details).
  • Details of the donation (type, FMV, date, and purpose).
  • Any follow-up actions, such as thank-you messages or recognition.

Recording donations in a CRM allows nonprofits to centralize donor data, track giving histories, and analyze trends. This information is invaluable for stewardship efforts, future fundraising campaigns, and reporting to funders or auditors.

5) Provide a gift receipt for each donation.

After receiving an in-kind donation, the nonprofit should issue a formal receipt to the donor. Providing a receipt is a professional and ethical practice that acknowledges the donor’s contribution. It also helps donors claim tax deductions and reinforces their trust in the organization, encouraging future support.

This receipt should include the following information:

  • Name of the organization
  • Statement of tax exemption
  • Date of donation
  • Description of donation
  • Disclosure of quid pro quo contributions

In order to comply with IRS regulations, you’ll need to send an acknowledgment letter for each in-kind gift valued at $250 or more. However, it’s a good practice to thoroughly thank your donors for gifts of any size, so we recommend providing gift receipts for all in-kind donations you receive.

Top data to track to maximize in-kind donations

Tracking top data points is essential to maximize the effectiveness and impact of in-kind donation tracking. By focusing on key pieces of information, nonprofits can maintain accurate records, streamline processes, and enhance their operational efficiency.

We recommend keeping tabs on the following in-kind metrics and KPIs:

In-kind donor engagement history

It’s important to recognize which donors are contributing in-kind gifts to your cause⁠—and what kinds of other support they’ve given in the past. That said, this data point involves tracking how and when donors have engaged with the organization regarding in-kind contributions.

Key details include:

  • Previous in-kind donations made, including dates and values.
  • Types of goods or services donated.
  • Communication history, such as thank-you notes, follow-ups, and invitations to events.
  • Notes on the donor’s preferences or special requests.

All in all, understanding donor engagement history helps nonprofits tailor their outreach efforts, strengthen relationships, and encourage repeat contributions. It also provides insights into what motivates donors to give in-kind, enabling more effective asks in the future.

Types of in-kind donations received

This data tracks the variety of goods and services provided by donors. Key categories include:

  • Tangible goods (e.g., food, equipment, clothing).
  • Professional services (e.g., legal advice, marketing support).
  • Use of space or equipment (e.g., event venues, vehicles).

Understanding the types of in-kind donations received helps nonprofits identify patterns and gaps in their resources. It also aids in planning future donation campaigns and recognizing the specific needs of their programs.

Donors’ employment information

Tracking donors’ employment details can reveal potential connections to companies or industries that may provide in-kind contributions or other forms of support. Key data points include:

This information can help nonprofits identify opportunities for workplace giving programs, corporate sponsorships, or other forms of support. It also enables nonprofits to approach donors for introductions to decision-makers at their organizations.

Top companies contributing in-kind donations

Nonprofits should track companies that regularly provide in-kind support or have a history of significant contributions to their causes. Key data includes:

  • Company names and contact information.
  • Types and values of past donations.
  • Industries represented and areas of expertise.

Identifying top contributors helps nonprofits focus their corporate outreach on organizations that are most likely to support their mission. It also provides a starting point for building partnerships and expanding support networks.

Donation referral sources

This tracks how donors learn about the organization and its need for in-kind donations. Common referral sources include:

  • Word-of-mouth recommendations.
  • Social media or online campaigns.
  • Corporate partners or community events.

Knowing referral sources allows nonprofits to evaluate the effectiveness of their outreach strategies and focus on channels that yield the most support. It also highlights the importance of cultivating relationships with individuals and organizations that refer potential donors.

In-kind donation impact

Tracking the impact of in-kind contributions involves measuring how these donations have supported the nonprofit’s mission. Key data points include:

  • Cost savings achieved through in-kind support.
  • The number of people served using the donated goods or services.
  • Stories or testimonials demonstrating the benefits of the contributions.

Quantifying the impact of in-kind donations strengthens the nonprofit’s ability to communicate its value to stakeholders, including donors, funders, and the community. This data can be used in reports, grant applications, and marketing materials to showcase the organization’s success and inspire further support.

Wrapping up & additional resources

For nonprofits, tracking in-kind donations is more than just a best practice; it’s a cornerstone of effective fundraising and donor management. By implementing organized systems, ensuring proper valuation, and maintaining clear records, your organization can enhance donor relationships, meet compliance standards, and better measure its impact.

As your nonprofit embraces these strategies, you’ll be well-positioned to turn in-kind contributions into powerful tools for advancing your mission. With transparency and efficiency on your side, your team can focus on what truly matters—making a difference in the communities you serve. Good luck!

Keep learning⁠—check out the following additional resources to continue growing your fundraising and corporate giving knowledge:

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