Episode Description
How to record in-kind donations for nonprofits is more than an accounting question . . .it reveals what programs truly cost and how much support the community contributes! Justine Townsend, Manager at Your Part-Time Controller (YPTC), explains how to value, document, report, and steward noncash gifts without distorting the books.
Donated office space, food, equipment, vehicles, program supplies, graphic design, and certain professional services can represent significant organizational support. If a nonprofit would otherwise need to purchase the item or service, failing to record it may understate both revenue and expenses, and conceal the real cost of delivering the mission.
Fair market value is where things become complicated. Food banks may use published food valuations, while donated office space may require comparisons with similar local properties. Donor estimates also deserve scrutiny. Justine recalls an advertising contribution valued at approximately $1 million (enough to nearly double one organization’s reported annual revenue) before the valuation methodology was challenged.
“The finances are just our story told in a different way,” Justine explains. Accurate records support more than audits and Form 990 reporting. They strengthen budgeting, donor stewardship, vendor relationships, fundraising communications, and financial planning.
The conversation also exposes a frequent operational failure: development teams negotiate in-kind support, but finance learns about it late—or not at all. A clear gift acceptance policy can establish what the nonprofit will accept, who approves unusual contributions, when appraisals or additional forms are needed, and whether the organization can actually use or sell the donated property.
Volunteer support deserves attention too. Verified volunteer hours may support audit-note disclosures and show funders the depth of community participation. As Justine says, in-kind support helps tell “the story of how much the community loves, supports, needs and wants what you’re doing.”
Key Takeaways:
Record qualifying in-kind revenue and its corresponding expense.
Use supportable market evidence—not an unquestioned donor estimate.
Describe donated property on acknowledgments without assigning its tax value.
Create a separate receipt process for noncash contributions.
Connect development, finance, and donor stewardship before accepting gifts.
Budget for donated resources so leaders understand replacement costs.
00:00:00 Why In-Kind Donations Really Count
00:02:13 What Qualifies as an In-Kind Donation?
00:04:00 When Donated Services Can Be Recorded
00:04:37 Valuing Free or Discounted Office Space
00:06:16 Who Determines Fair Market Value?
00:08:32 Event Discounts, Goods and Professional Services
00:10:21 Reporting, Stewardship and Form 990
00:13:34 Fixing the Finance–Development Disconnect
00:14:43 Tracking Volunteer Hours and Their Value
00:17:19 Valuation Mistakes and Gift Acceptance Policies
00:22:53 The Cost of Not Recording In-Kind Gifts
00:25:14 What Belongs on the Donor Receipt
#NonprofitFinance #InKindDonations #TheNonprofitShow
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