The best gift a nonprofit organization can receive is unrestricted cash, but an inkind donation of something your organization needs and would have otherwise purchased is also a high-value gift.
For example, if you are raising funds for a much-needed van and someone donates a van that meets your organization’s needs, you can close that campaign and focus your efforts elsewhere.
In reality, the van or other gift you receive is not exactly what you would have purchased. It may be older, smaller, a different model, and less-than-perfect.
But, it’s yours!
And it’s called an inkind gift.
Basically, it’s a non-cash donation made to a nonprofit organization.
It can be goods or services and can come from individual donors, corporations, or small businesses.
When you think about an inkind gift, you may think of stuff, such as bottled water and packaged snacks for events or hotel-sized shampoo and conditioner for a shelter serving homeless families.
But inkind gifts can also be intangibles such as professional services and rent-free space for offices or programs.
The social media specialist who helps you set up your social channels and content calendar then trains your staff on posting engaging content is an inkind donor, and a high-value one at that!
The company that donates surplus tote bags with their logo on them for families at your food pantry to use when shopping is an inkind donor. Yeah, it would be nice to have your organization’s logo on the tote bags, but if money to purchase tote bags isn’t in the budget this year, the donated ones will work just fine.
There’s more to inkind donations than you might think. Let’s take a closer look so you can handle these special gifts the right way and use them to grow your nonprofit.
Inkind Donations Benefit Organizations and Donors
Inkind donations provide goods and services you need, freeing up cash donations for other purposes.
Some organizations, such as clothes closets and food pantries, rely heavily on inkind donations.
Advocacy organizations and organizations that provide mental health services and other types of support, may not lend themselves as well to inkind donations of goods. But a donation of office space might be possible. Or a billboard for an ad.
Almost all nonprofits can benefit from inkind donations to some degree.
The surprising part is that donors benefit, too, from giving inkind donations.
For businesses, the advantage of an inkind donation is that a gift of something the business already owns does not impact cash flow.
A business may be able to get an item such as printer cartridges or cases of paper at a bulk discount, then share a few with you. (I’ve had that happen.)
Or maybe they have a graphic designer on staff who has a light workload and they can easily offer you graphic design services for your upcoming event without it costing them anything extra. (I’ve had that happen, too.)
When you approach a business for the first time, asking for an inkind gift can be a great way to initiate a relationship. It’s your way of saying, “I’m not asking for too much, just something you already have on hand.”
It’s usually an easier Ask than going for an expensive event sponsorship and hey, inkind donations can be GREAT for fundraising events, especially auctions!
For individual donors, there is often something special and more meaningful about giving a tangible gift, like a box of spaghetti and a jar of marinara sauce to a food bank or diapers and onesies to a family shelter.
The donor feels more connected to the mission by giving an inkind gift than making a cash donation on the organization’s website.
The donor that drops off laundry detergent today, could be a donor who gives a significant cash gift tomorrow. So never discount or underestimate those who like to give stuff.
InKind Donations You Don’t Need Benefit Only Donors
With all these advantages of inkind donations, what’s not to love?
Well, there can be a downside to inkind gifts from companies and individual donors. The first is the dreaded ‘take-this-off-my-hands’ gift.
This is a gift of something the donor does not need and wants to unload for whatever reason.
A few of these types of inkind “gifts” can cause an organization to decide to stop accepting inkind donations in the future.
Similar to that is the ‘this-will-cost-more-than-it’s-worth’ gift. Sometimes, you’re offered the donation of something like a piece of land that isn’t exactly usable and will cost more to fix up than it’s worth.
For example, a homeless shelter in my area was given a piece of property in a prestigious community. At first blush it seemed like a great donation…until it was discovered that the land was not usable for building on due to a steep grade.
So, what in the world would the shelter do with it? The donor thought the nonprofit could sell it which made no sense since the donor himself had been unable to sell it!
Another challenging aspect of inkind gifts is receiving supposedly gently used items that are more than gently used. You get the feeling the donor wanted to get rid of the items without the guilt of putting them in the landfill. So the landfill guilt gets transferred to you!
Often, thrift stores fill several dumpsters per month with unsellable items that have been donated. It’s unfortunate, but it happens. Sharing a list of what is and is not acceptable can help deflect some of these donations from well-meaning people.
Sometimes you get offered something in the spring that you’ll need in the fall, and you have to find a way to store it for several months. That means the “free” inkind donation could have a cost associated with it if you have to pay for storage. At a minimum, it will take up space that you could have used for something else.
Sometimes you get an inkind offer from a major donor or longtime supporter of your work that you feel obligated to take even though you don’t really need it, just because of the relationship. Be very careful here! I know you want to say “yes” to this important donor, but don’t set the precedent that you’ll say “yes” to crap donations.
And even when you get the exact items you need in great condition … it takes time to organize, store, and distribute everything. Even “free” donations take time to accept, store, use, receipt, and manage properly.
When looking at donations through the lens of convenience, cash is king, meaning monetary donations are always easier to manage than inkind donations.
Inkind Donation Success Story
To offset those concerns, here’s an incredible inkind donation success story.
A tiny nonprofit was launching a capital campaign to buy land and build a modular structure to meet the needs of the immigrants they served. They needed a hospitality house where family members could stay while visiting a loved one awaiting deportation at an isolated detention center in rural Georgia.
The organization had outgrown the one-bathroom rental house they had used for several years. Although the Board wished to remain a small organization with a small budget, they saw no way around their need for a bigger house.
Buying land in a small town can require patience, and the Board’s offer to buy land for a modular hospitality house stalled.
Then, out of nowhere, a television personality asked her network to buy the organization a house … and the network said yes!
The new hospitality house opened three months later. Five bedrooms! Four bathrooms! Bigger, more comfortable, and homier than the modular structure the Board originally envisioned.
The value of the gift was more than $175,000, far exceeding the Board’s annual budget at that time of $99,000. The capital campaign became a capacity-building campaign and the house now more than meets the needs of the people the organization serves.
Creating a Process for Inkind Donations
Being open to inkind gifts means being flexible, being satisfied with something that’s close to what you want but not exactly right, and being offered items your organization does not need.
To successfully leverage inkind gifts as a slice of your fundraising pie, create an easy process for prospective donors to understand your organization’s needs so you can easily accept things you can use and decline those you can’t.
Without a process, you may end up fielding offers of things you do not need and feeling obligated to accept them. Because, if you turn down an inkind gift, you may feel like you are turning down a donor trying to engage with your organization.
By tackling inkind gifts in a way that focuses on your organization’s current needs, you can engage with donors in a positive way, even if their offer of a riding lawn mower is not something your organization needs at the moment.
A system for accepting inkind donations makes it easier for you to manage the process.
Start by reviewing your operating budget for the things you plan to buy and the services you plan to pay for this year. Include mundane purchases like copy paper and other office supplies and services such as graphic design and website administration.
Go through your list and highlight things you might be able to get as inkind donations. Think about items businesses might already have on hand, such as packaged snacks for an event. Think about items that might pluck the heartstrings of your donors, such as toiletries, school supplies, and school uniforms.
New socks and underwear for men in homeless shelters are easy to source as inkind gifts, as are feminine products and hair and skin care products for domestic violence shelters. These items resonate with people, and they feel connected to the cause when they can give a person a jacket or a roll of quarters and laundry detergent.
When thinking about services you can get donated, think about your network and who you know who has the right skills. Your Board is an obvious place to start. If you have a Board member who owns a printing shop, ask them about providing printing services at a discount. Sometimes service-based businesses will donate the labor for a project and give you the materials at cost. Sometimes they will just do the job for free. It all depends on their situation and their desire to help.
Never assume a volunteer will provide professional services indefinitely. Many professionals will do one job for free and then subsequent jobs at a discount. If you are playing for website hosting or similar services, see if someone on your Board also pays for that service, and maybe they can get a group discount.
Catchafire is a service that matches professionals with nonprofits. A subscription is expensive, but you may be able to get access for free from your community foundation. This can be a game-changer in terms of the services, including high-value professional advice that you can access as inkind donations.
Once you have a list of the products and services you have already budgeted, make a list of the things you could use if you did not have to buy them. For example, if you operate an after-school program, your students may need headphones and other technology items. These are easy to source as inkind donations. They might provide a lot of value for the families you serve without a lot of effort on your part.
Don’t forget gift cards. Many donors love to give gift cards, especially if you can give them directly to people in need. Gas cards, grocery store cards, and cards to big-box stores are rewarding to give and useful to receive. Depending on your situation, bus passes could be a very valuable inkind donation to your nonprofit.
From these lists, create a master list to share with the public of items and services your organization needs. Be specific and let prospective donors know where and when to send or deliver the items. Make it clear if gently used items are accepted. If so, remind people to only contribute items in good condition, items they would give a friend or family member.
Post the list on your website and market the list through your newsletter, social media channels, and other marketing channels. Designate a day each week or month for posting your needs list on social media. Make sure your list is regularly updated with the most current needs.
Make it as simple and clear as possible for supporters to make an inkind donation. For items like copy paper, toothbrushes, towels, and similarly easy-to-find items, create a wish list through Amazon, Target, or similar company so donors can purchase items online and have them sent directly to your organization.
Be aware that you might not get contact information for inkind donors which means you can’t thank them. But you can post a thank you/update on social media. And your donors will appreciate the convenience of using the wish list.
Create a process for receiving inkind items. Your donor software can do this or you can use a simple spreadsheet. Record the item, the estimated value, the donor, and the donor’s contact information, if available. Attribute the gift to the appropriate campaign, project, or program, if applicable.
For services, describe the service provided and the approximate number of hours contributed, as well as the donor’s information.
Draft a customizable thank-you note for inkind items you receive. In the US, according to IRS rules, you should not estimate the value of the gift. The donor is responsible for that and can attach the receipt if necessary. Encourage the donor to consult their tax professional. Describe the item, and let the donor know how the item was used, and that it was appreciated.
Draft a customizable thank-you note for inkind services you receive. Note the number of hours the professional spent, the project the professional worked on, and how their work impacted the people or animals your organization serves. Again, do not place a value on the services.
Advise the donor to consult their tax professional for guidance on deducting the donation of inkind services on their taxes.
Create an inkind gift acceptance policy to make it easy to decline items offered to your organization that you do not need. The policy should specify types of items the organization never accepts and note that some items are only accepted seasonally and space-permitting. Post the policy on your website.
If you still get an offer for something you do not need, thank the donor for the offer, and let them know that your organization does not need the item. Refer the donor to two or three organizations that might want the item, if you know of any.
Do not feel pressured into accepting items you don’t need! Accepting unneeded donated items creates storage and clutter problems. Most donors will understand and appreciate that you don’t want to accept their item if you cannot put it to immediate use.
Sometimes you are offered an item you need, but the company has a very large supply to give away. If the gift is beyond your scope, say so. Maybe they will let you accept a portion of their supply. Sometimes the donor expects you to drop everything and pick up the item. If you can’t do this, say so.
This happens often in the world of food banking. A donor may have a tractor-trailer load of food but the food pantry can only take 1 pallet. If you can make a few phone calls to quickly round up others who can take the rest, you may still be able to say “yes” to the donation.
As you start to market your list of inkind items your organization needs, make sure you have a place to put the items. Try to find a designated storage room, rather than let everything pile up in work spaces.
Work with the appropriate person on your team to make sure donated items are given away or used as soon as possible. If you receive a large donation of new socks for people staying at your homeless shelter, make a plan to distribute the socks right away. If the donation is too large for you to distribute within a month or two, consider sharing with another organization.
Be sure to include inkind donations in your annual budget each year so you can accurately reflect the true picture of what it costs you to operate your nonprofit each year. You’ll need a line item in both the income and expense sections of the budget for each kind of inkind donation you anticipate.
The Bottom Line
By going after inkind donations in a strategic way, you may be able to get lots of products and services donated that you would have otherwise paid for.
It’s a good idea to include Asks for inkind donations in your annual fundraising plan.
When you get inkind donations, you’ll have more money to fund the biggest line item in most nonprofit budgets: salaries. This is super handy if your nonprofit is just getting started!
Inkind donations are not the solution to all your organization’s money struggles, but they are worthwhile to go after to maximize donor engagement and raise more so you can do more.