When you receive gifts of products, time and services, be aware that your organization can be held in even greater regard by donors of such In-Kind gifts, should you express your gratitude in a meaningful way---in a manner far and above how these contributions are usually acknowledged by non-profit organizations. This can be accomplished in strict keeping with the applicable IRS rules and regulations, which are especially explicit when it comes to In-Kind gifts and how non-profits handle them.
By law, non-profit organizations cannot provide a donor with the dollar value of an In-kind gift. Such valuations when applicable, relative to "fair market value" of In-Kind gifts, need to be professionally assessed and certified elsewhere---if they can be---and that is the responsibility of the donor. This certification subsequently needs to be resolved with the professionals and others who prepare the donor's tax forms---whose work in turn will need to be reconciled with IRS regulations. In instances where time and service are donated, no tax break whatsoever is allowed, as the IRS Publication 526 clearly states, "You cannot deduct the value of your time or services..."
This unique aspect of In-Kind gifts often causes a non-profit organization to acknowledge them in understated, and almost offhanded ways, unlike the precisely stated amounts cited for gifts of cash and stocks. As well, the dollar value of gifts of cash and stocks can be directly related to specific programs and services made possible by such support, which is not usually the case with In-Kind gifts. Thus, appreciation of In-Kind gifts is not always expressed as effectively and graphically, but it can and should be.
A non-profit organization can acknowledge In-Kind gifts with descriptions of their practical value to the organization, and make some reference to their worth in dollars---what they might have had to pay "retail." Most non-profit organizations could treat their In-Kind gifts in somewhat the following way:
Sample Acknowledgment for an In-Kind Gift
"Thank you for your generous gift of ________(Full Description)________ which we received on ____(Date)____. Your generous contribution will help to further the important work of our organization.
(Note: The benefit to the organization of the In-Kind contribution may be expressed in exact terms of its direct application to the organization's operation, or it may be more appropriate that an indirect reference be made when the In-Kind gift's application is not as sharply defined.)
While, according to IRS regulations, you will not be allowed to declare the value of your donation from our acknowledgment, we can say that, but for your generosity, we likely would have had to expend approximately $________ for what you gave as an In-Kind contribution. These are dollars saved which we are able to apply directly to support the programs and services we provide for the well-being of those whom we serve in our community."
Recognition: Same as Cash
In addition, appreciation of in-kind contributions can always be publicly recognized by non-profits in their annual reports and other publications, with the donors' names listed under the respective gift category amount related to the "retail value" of products, time or services donated. As stated previously, those figures would not be IRS-deductible amounts, and are not certified as such. But the public gestures by non-profit organizations regarding the "market worth" of In-Kind gifts are always greatly appreciated by the donors.
There can be little doubt that your In-Kind donors would be quite pleased to see their names listed in a contribution category of that "retail cost" right up there with the givers of cash. This public listing has been practiced for many years, with those contributing cash finding no fault when In-Kind donors are placed in the same category with them. And more importantly, donors of In-Kind gifts frequently express their gratitude for being recognized in such an appropriate and thoughtful manner.
Don't Be Unkind to In-Kind
To reinforce the idea that it is a well-served practice to recognize In-Kind gifts in the way suggested, and that by not doing so could disappoint or alienate the donors of such gifts, I am reminded of two incidents.
Recognize What it Would Have Cost You "Retail"
In-Kind vs. "Real Money"
Never Take In-Kind Gifts For Granted
The final message here is that you must regard all types of "In-Kind" gifts with the care and consideration they deserve. It's so easy, and so appropriate to acknowledge "real" cash and securities properly. But all too often when it comes to In-Kind gifts, it's another kettle of fish. It should not be.
Tony Poderis was for 20 years to 1993 Director of Development for The Cleveland Orchestra and its Summer Home, BlossomMusicCenter. He was responsible for Cleveland's largest annual institutional fund-raising campaign. Since 1993, Tony has been a fund-raising consultant serving all non-profit institutions' needs to develop and to maximize their potential to raise Annual, Endowment, Capital, and Sponsorship & Underwriting funds.