Unlocking the Value of In-Kind Donation: What You Need to Know

The Power Of In-kind Donation

An in-kind donation is as valuable for nonprofits as cash donations. If you’re an event organizer and you’re open to accepting in-kind donations, this blog post will provide you with all the details you need. 

First, let’s start with understanding the definition of in-kind donations.

What are In-Kind Donations

In-kind donations are contributions of individuals or organizations for a specific charitable purpose. Instead of a cash gift, people who wish to contribute to the cause can give in the form of goods, products, time, or services. 

Some examples of in-kind donations are: 

Goods 

Depending on the needs of your organization, goods can be in the form of food, clothing, medical supplies, furniture, other office equipment and supplies, toys, books, and other types of products that the organization needs.

Services

These services can be professional expertise, legal advice, graphic design, photography, marketing, event planning, accounting, or other specialized skills.

Space or Facilities 

Every event needs a venue to host their events or fundraising. Event venues, meeting rooms, office spaces, and storage rooms are just some examples of an in-kind donation through space or facilities. 

Equipment and Technology 

Donations of equipment, gadgets, and technology are very valuable donations that nonprofit organizations can benefit from. Mobile phones, printers, vehicles, software licenses, and subscriptions are some examples. 

Time 

Although not necessarily tangible, people can choose to give their time through volunteerism or professional services. 

Advantages of In-Kind Donations for Event Planners

There are several advantages of in-kind donations for event planners and nonprofit organizations. 

Firstly, the organization can have reduced expenses. With this in mind, In-kind donations can shape and build your event budget. 

For example, instead of spending thousands of dollars for food or catering to your event, you can receive in-kind donations in the form of food from local businesses. As a result, you can allocate the amount you saved to other expenses for your event.

Aside from food, in-kind donations from sponsors can also be used for raffles, giveaways, auctions, or even for raising funds.

Apart from giving money or from increasing the budget, in-kind donations offer the chance for diverse support.

Because in-kind donations usually require a set agreement between the organizer and donor, it allows for building partnerships with businesses that share a common goal. 

Furthermore, in-kind donations give opportunities for increased community engagement. For example, in-kind donations from trusted brands can get the interest of community members and drive attendee participation in the event. Additionally, individuals or businesses who contribute with in kind donations have a higher sense of ownership with the cause or event. 

Finally, establishing a system for in-kind gifts contributes to diverse revenue streams for your organization. 

For instance, a nonprofit that receives a donation of artwork might host an art exhibition and sell tickets to raise funds. Fundraising events also organize silent auctions where bidders can write their names and bid amounts on the sheet to make offers.

While in-kind gifts bring with them a lot of benefits, there are also challenges that organizations must take into account.

Problems of In-Kind Donations

Quality Issues

Event planners can probably relate to the struggle when they receive in-kind gifts that do not meet the appropriate quality they need.

Look out for quality issues like expired or perishable items, damaged or non-functional items, low-quality or unsafe products, incompatibility, and low relevance. 

Avoid quality issues on your in-kind donations by trying the following:

  • Clear donation guidelines: Communicate the specifics of your in-kind donations on your website and social media pages to set clear expectations from your donors. Create a gift acceptance policy for evaluating the suitability and relevance of each donation to the organization’s mission.
  • Needs assessment: Conduct a thorough needs assessment to identify the specific items or services that the organization requires. Clearly communicate these needs to potential donors to ensure that the donations align with the organization’s priorities.
  • Pre-screening process: Before accepting any of the donations, the donor coordinator can request information about the items or services they wish to donate. Assess their suitability before accepting the donation.
  • Quality Inspection: Examine donated items for quality, functionality, and safety. If feasible, have a designated team or individual responsible for inspecting donations to ensure they meet the organization’s standards.

Storage Issues

Unlike cash donations, in-kind donations are more tangible. The items usually come in bulk therefore the challenge on where to securely store the item becomes a challenge. 

Donated perishable items such as food require immediate storage and distribution to avoid spoilage or waste. Nonprofits must have suitable refrigeration or storage facilities to manage these items.

Manage potential storage issues by partnering with other organizations for shared storage solutions.

How to Ask for In-Kind Donations for Your Fundraising

Now, we go to one of the nonprofit planners’ main concerns – how to get in-kind donations. 

These steps can serve as a guide as you strategize for your fundraising:

Identify the items you need

Begin by clarifying what the in-kind donations are for. Is it for program support? Auction? Prizes? Community outreach? 

After identifying the purpose of the donation, list down the specific items together with the quantity you need. 

You can also create a wish list of specific items your organization needs and share it with potential donors. This makes it easy for them to choose items they can donate directly.

Identify potential donors

Reach out to potential donors by sending them a custom sponsorship request letter. Search for donors that align with your mission. To do this, you can check out their website and go to their story or mission. 

Pro tip: Use LinkedIn and look for donor coordinators to reach out directly to them. 

Create a compelling case 

In your event sponsorship letter, clearly write the potential impact they will receive by sending an in-kind donation. 

Some things to highlight in your letter could be the potential for tax-deductible benefits they can receive, donor recognition, and value-added incentives like maybe free tickets to your event.

Moreover, you can incorporate visuals, such as images or videos, to bring the event and its impact to life. Utilize storytelling in short-form video format to connect emotionally with potential donors and inspire them to take action.

Maintain relationships

Asking for donations will be more effective once you have some sort of relationship with your donors. 

One way to do this is by providing documentation for transparency. Compile receipts and give receiving copies to show them where their resources are going. 

Do not end the relationship right after receiving the in-kind donations you need. Continue inviting them for engagement opportunities with your organization and share impact stories because of their contribution. 

Send appreciation gifts in kind and personalized thank you letters to keep you top of mind even until your next nonprofit event.

Letter of Donation Request Template

Because we’re always here to make your jobs easier, here are some letter of donation request templates you can use to send to potential donors. Make sure to customize and add a personalized touch to your letters to draw them to respond. 

Letter Template 1: General In-Kind Donation Request Letter

[Your Name]

[Your Title/Position]

[Nonprofit Organization Name]

[Organization Address]

[City, State, ZIP Code]

[Date]

[Donor’s Name]

[Donor’s Address]

[City, State, ZIP Code]

Dear [Donor’s Name],

I hope this letter finds you well. On behalf of [Nonprofit Organization Name], I am reaching out to request your support in-kind contribution through an in-kind donation.

As a nonprofit dedicated to [briefly describe your organization’s mission and the impact you make in the community], we rely on the generosity of businesses and individuals like you to fulfill our mission. Your in-kind contribution can help us further our efforts in [describe your organization’s key initiatives and projects].

We are seeking donations such as [list specific items, goods or services used, or expertise you need] to support our upcoming [specific event, campaign, or project name]. Your contribution will directly benefit [describe how the donation will be utilized and who it will serve].

Your support will be recognized and appreciated by our organization and will be showcased [mention any recognition or exposure opportunities you offer to donors].

If you are willing to contribute an in-kind donation, please let us know your preferred method of donation or how we can collect the donated items. You can reach me directly at [your phone number] or [your email address] to discuss any details or arrangements.

Thank you for considering our request. We are truly grateful for your support and commitment to our cause. Together, we can make a meaningful impact in the lives of those we serve.

Sincerely,

[Your Name]

[Your Title/Position]

[Nonprofit Organization Name]

[Contact Information]

Letter Template 2: Sponsorship In-Kind Donation Request Letter

[Your Name]

[Your Title/Position]

[Nonprofit Organization Name]

[Organization Address]

[City, State, ZIP Code]

[Date]

[Business/Organization Name]

[Contact Person’s Name]

[Business/Organization Address]

[City, State, ZIP Code]

Dear [Contact Person’s Name],

I am writing on behalf of [Nonprofit Organization Name], a registered nonprofit committed to [briefly describe your organization’s mission and the impact you make in the local community here].

[Nonprofit Organization Name] is hosting our [specific fundraising event or project name], and we are seeking partners who share our passion for [describe the cause or theme of the event]. Our organization believes that [Business/Organization Name] has a significant presence and influence in the community and would be an excellent partner for this event.

We are kindly requesting an in-kind donation to support our event. Your contribution could take the form of [specific items, services, or expertise you are seeking], which will directly enhance the experience for our attendees.

As a sponsor, [Business/Organization Name] will receive prominent recognition during the event through [mention any recognition or exposure opportunities you offer to sponsors]. Your logo will be prominently displayed on marketing materials, our website, and at the event venue.

I would be delighted to discuss this opportunity further and explore how we can showcase your commitment to the community while supporting our cause. Please feel free to contact me at [your phone number] or [your email address] to discuss the details.

Thank you for considering our request. We believe that together, we can create a meaningful and impactful event that will benefit both board members of our organizations and the community.

Sincerely,

[Your Name]

[Your Title/Position]

[Nonprofit Organization Name]

[Contact Information]

Letter Template 3: Specific In-Kind Donation Request Letter

[Your Name]

[Your Title/Position]

[Nonprofit Organization Name]

[Organization Address]

[City, State, ZIP Code]

[Date]

[Donor’s Name]

[Donor’s Address]

[City, State, ZIP Code]

Dear [Donor’s Name],

I hope this letter finds you well. I am writing to request your support for [specific in-kind donation needed] for our [describe the purpose or event where the donation will be utilized].

At [Nonprofit Organization Name], we are dedicated to [briefly describe your organization’s mission and the impact you make in the community]. Your contribution can play a vital role in helping us achieve our goals.

We are seeking [specific item or service needed] to [describe how the donation will directly benefit your organization and the community you serve]. Your very generous gift of support will make a meaningful difference in the lives of those we serve.

Your donation will be recognized and appreciated by our organization, and we are happy to showcase your commitment through [mention any recognition or exposure opportunities you offer to donors].

If you are willing to contribute to the in-kind donation, please let us know your preferred method of donation or how we can collect the donated items. You can reach me directly at [your phone number] or [your email address] to discuss any details or arrangements.

Thank you for considering our request. We are truly grateful for your support and commitment to our cause. Together, we can create a lasting impact in our community.

Sincerely,

[Your Name]

[Your Title/Position]

[Nonprofit Organization Name]

[Contact Information]

How to Track In-Kind Donations

Unlike cash gifts, recording in-kind donations can be a challenge. However, tracking is an important task to do in order to build credibility and transparency with your donors.

It’s a good idea to create a standard form to record a detailed description of the gift, the date the gift was received, the donor’s contact information, the estimated fair market value of the gift, and how the value was determined. A good tracking system makes it easier for event planners to send a post-event impact report. 

Try the following methods and strategies to track your in-kind donations: 

Donation Database

A donation database is a master sheet or document where all the necessary donor information is listed. Specifically, it serves as a centralized repository to store, track, and analyze data related to donors, donations, fundraising campaigns, and other essential aspects of nonprofit fundraising efforts. 

Categorize Donations

Categorize the donations you receive to make it easier to send communications and follow-ups to your donors. 

You can categorize by donation type, frequency of contributions, fair market value, purpose, engagement level, event participation, donor demographics, and recognition level.

Documentation

One tried and tested way for donors to track their in-kind donations is by providing documentation through photos, video, acknowledgment letters, receipts, and appraisal reports

The documentation gathered can be compiled into a comprehensive PDF report or video format that you can post on social media or send via email. 

Digital Tools and Applications

Event Espresso or Event Smart – Event Espresso and Event Smart are event ticket-selling and registration platforms that nonprofit event planners love because of their simple and easy-to-use features.

A key feature of Event Espresso is its customizable event registration forms. You can easily set up a registration form for donors on your event site and add notes and collect information about them. 

  • Google Sheets  – Google Sheets is a tool that’s probably familiar to every event planner. Set up timeline tables and track finances easily with GSheet’s many features.
  • Bloomerang: Bloomerang is a comprehensive donor management software that includes features for tracking both monetary and in-kind donations. It allows nonprofits to record and categorize in-kind contributions, manage donor profiles, and generate customizable reports.

Tracking Timeline

A tracking timeline is a valuable tool that creates a standard operation procedure in tracking donations. In other words, it serves as a step-by-step guide for the entire process of tracking, acknowledging, and documenting each contribution.

A tracking timeline usually lists the flow of tracking the donation. This usually includes the following: 

  • Receipt and Record-Keeping
  • In-kind Donation Form
  • Appraisal
  • Written Acknowledgement Letter
  • Categorization and Data Entry
  • Communication and Follow-Up
  • Stewardship and Recognition 
  • Reporting and Analysis
  • Year End Statements

Annual Evaluation

Finally, an annual evaluation is a valuable practice for nonprofit organizations to assess and track the progress and state of all the nonprofit events. 

The annual evaluation involves conducting a comprehensive review of all in-kind donations received throughout the year. This includes both tangible items and non-tangible services donated by individuals, corporations, or other entities.

The insights gained from the evaluation can inform the nonprofit’s strategic planning for the upcoming year and future events. Additionally, it helps set realistic goals, allocate resources effectively, and refine fundraising strategies to optimize in-kind donation efforts.

Policies and Taxes for In-Kind Donations

When donors contribute tangible goods or non-tangible services to a nonprofit organization, determining the fair market value is essential for various purposes, including for tax deduction, reporting, and acknowledgment.

The usual question surrounding in-kind donations is if it is considered as revenue. The answer is yes – an in-kind donation’s fair market value is typically recorded as revenue.

However, there is a specific tax category for nonprofit organizations that can be exempt from federal tax. These organizations are usually called 501(c)(3) Organizations.

Section 501(c)(3) is a portion of the U.S. Internal Revenue Code (IRC) and a specific tax category for nonprofit organizations. Eligible organizations usually fall into one of three categories: charitable organizations, churches and religious organizations, and private foundations.

The IRS provides guidelines on eligible deductions based on the fair market value of the donated items or services. Furthermore, the IRS states that “You can only deduct charitable contributions if you itemize deductions on Schedule A (Form 1040), Itemized Deductions.

For high-value items, obtaining professional appraisals can ensure accuracy and compliance.

Finally, there is a tax applicable for those who transfer generous amounts of gifts or property in their lifetime called a Gift Tax.

What is a Gift Tax?

According to the IRS website, “The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether or not the donor intends the transfer to be a gift.”

The donor is the one who usually pays for the gift tax. 

Organize a Successful Fundraiser with Event Espresso

Organizing a fundraiser is a noble and fulfilling cause. You can focus on organizing a smooth event when you have reliable tools to help you like Event Espresso or Event Smart

Event Espresso is a ticket-selling and registration platform that offers a $0 commission fee on an unlimited number of tickets sold. It is cost-effective which nonprofit event planners love. 

At just a simple flat fee you can enjoy important features like setting up event registration forms, collecting secure payments, selling multiple ticket types, customizing confirmation emails, and more. 

Nonprofit organizations can also apply to qualify for a special discount. Start planning your nonprofit event now. 

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