Some contributors like to donate in-kind items. This allows them to see their donation and where it is going. Product gifts are easy to incorporate into grant proposals.
Dealing with in-kind items involves being organized and tracking items. Cataloging donated products and services is a key task. Your organization should have in place a process for identifying in-kind contributions.
Documentation is key!
Keep a list of the in-kind gifts. Consider the value of your organization’s volunteer efforts. Give an hourly value to the time volunteers put into supporting your organization. Think about the financial value of the volunteer hours for last year. Did you even document the monetary worth of volunteer hours?
Your accountant will estimate the financial benefit of your in-kind items and services. These things strengthen your organization’s bottom line and contribute to its financial well-being.
If you do not have a documentation strategy in place for in-kind donations, start planning and implementing it today. Be aware of all your contributions and their importance to your goals.
Structuring Your In-Kind Strategy
Teams would never win a football game if the coach did not have a game plan and rule book. As the manager of your organization, you are the coach, and it is up to you to set the rules and traina the team how to use these rules.
This means creating a rule book that is a reference tool for your staff, volunteers, and board members. Include in this reference guide the Internal Revenue Services’ regulations for managing gifts of services and products -- including volunteer hours.
Rely on your accounting policies about in-kind donations. These policies should outline how to handle the following:
Procedure for accepting these donations and establishing an inventory process
Create the steps for documenting and valuing the donations
Record the donations and verify them through your documentation process
Making a spreadsheet may be the easiest way to manage this documentation and any related details. This record will make it easier for your accountant to substantiate any contributions. Your organization can use this information to bolster cash donations. In-kind support can be a lead-in to more significant cash donations.
Also, you can put the dollar value of volunteer hours to good use if you apply for a grant. Presenting the financial worth of the volunteers not only supports the work your organization does, but it also demonstrates the need for your work. The volunteer dollars show the level of support you have from the community. Volunteer worth speaks volumes when it comes to demonstrating the commitment and encouragement the community gives your organization.
If you have questions about valuing and calculating your in-kind donations, just keep in touch with our blog. We have ideas to share and solutions to fundraising, management and organizational questions. When you have questions about any other not-for-profit industry topics, contact our not-for-profit team leader at trent@tbfosteraccounting.com.
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