In-Kind Donations

In-kind donations are contributions of goods, services, or the use of assets rather than cash. Common examples include donated food and clothing for relief organizations, pro bono legal or consulting services, donated office space, medical supplies, and auction items for fundraising events. Under ASU 2020-07, nonprofits must report contributed nonfinancial assets (in-kind gifts other than services) separately on the statement of activities and provide enhanced disclosures about their utilization, monetization policies, and valuation methods. In-kind contributions are reported at their estimated fair market value on Form 990. For donors, in-kind gifts of appreciated property (such as artwork, real estate, or securities) can provide significant tax advantages: the donor may deduct the fair market value without recognizing capital gains. However, valuation of in-kind gifts can be subjective and has been an area of concern — some organizations have been criticized for inflating the reported value of in-kind donations to make their operations appear larger or their program expense ratios higher. The GIK (gifts-in-kind) controversy particularly affects international relief organizations that receive donated pharmaceuticals or supplies valued at prices far above what they would pay on the open market. Donors evaluating a nonprofit on NonprofitTruth should note that large in-kind contributions can significantly affect revenue and expense figures.