Friday, August 29, 2008

In-Kind Gifts 101: Definition, Acknowledgement & the Law

An in-kind donation is a gift of goods and services. In-kind goods and services are typically goods and services that your organization would have to otherwise buy if they hadn't been donated. The value of the donated supplies or services may be recorded as the amount that your organization would have to pay for similar items.

Now, in-kind gifts should be a mirrored in your budget. You should have a line item for "in-kind" in both the income and expense sections of your budget (in-kind income = in-kind expense). For example, if you have in-kind printing worth $1,000. Then you would list "in-kind printing- $1,000" in the income section. And you would list "in-kind printing- $1,000" in the expense section.

When you receive an in-kind gift, the donor will often send you a note or letter placing a value on the gift. For example, when an artist donates an original art piece for your silent auction, they will often tell you that the value is X dollars. Many, many organizations will then send them a thank you/acknowledgement letter saying, Thank you for your generous gift of your original art valued at X dollars." THIS IS WRONG. Never place a value on an in-kind gift. Even if the value is told to you by the donor, and they ask you to send a letter with that value, you still can't. By law, non-profit organizations cannot provide a value of an in-kind gift to a donor. This is very important. Raise-Funds.com has an excellent and easy to understand explanation of this, and includes sample wording for your acknowledgement letters, to read the article click here.

1 comments:

Anonymous said...

Please vote for this project to give the artisans a decent life. For details visit this project...

http://www.membersproject.com/project/view/SQVEE2