As a church leader, you likely have some experience with fundraising. Maybe you’ve hosted a silent auction event that brought your congregation together to bid on exciting items and experiences. Or, perhaps you’ve launched online fundraising campaigns that directed donors to show their support via your donation page.
Regardless of the fundraising efforts you’ve engaged in, you’ve probably focused mostly on collecting monetary donations. While cash can certainly help you fuel your mission and grow your church, it isn’t the only way donors can support your work.
In-kind donations are contributions of goods or services that can help you offset costs, diversify your revenue, and offer donors a convenient new giving method. Whether you want to strengthen your existing in-kind donation strategy or are developing one for the first time, the tips in this guide will help you collect and manage in-kind contributions according to accounting best practices.
1. Create a gift acceptance policy.
When you collect physical items, you need to lay some ground rules. Creating a gift acceptance policy prevents your church from receiving items you can’t use, such as expired items, broken or damaged goods, items with legal restrictions, or hazardous materials.
The types of gifts your organization can and can’t accept
The circumstances or conditions under which you’ll accept different types of gifts
The process of recording each type of gift
While you should always appreciate donors’ kindness, receiving gifts you can’t use places a burden on your church to return or dispose of these items. Developing a gift acceptance policy and sharing it with your supporters allows you to not only kindly turn down gifts you can’t accept but also reduce the number of unusable gifts you receive in the first place.
Don’t forget that in-kind donations also include gifts of time and energy in the form of professional services. Make sure to highlight any services your church could benefit from in your policy, such as web design, accounting, or legal services.
2. Develop an in-kind donations page.
Promote your gift acceptance policy by creating a dedicated in-kind donations page on your website. Along with your policy, this page may include the following elements:
An explanation of in-kind donations so donors understand what kinds of goods and services they can contribute.
The benefits of these gifts for your church, such as increased financial flexibility and efficient resource delivery.
The benefits of these gifts for donors, such as convenience, a tangible understanding of their impact, and tax deductibility in cases of property contributions.
Any current pressing in-kind donation needs of your church, such as faith-related books and toys for your children’s ministry or catering services for your annual Christmas party.
Additionally, to give users a positive experience, your page should follow all web design best practices, such as,
Accessibility. Everyone who lands on your in-kind donations page should be able to interact with your content. Use a large, legible font, ensure ample color contrast between different visual elements, add alternative text to images, and provide closed captions for videos.
Clear navigation. Users should have a clear pathway to your in-kind donations page and from this page to other areas of your church’s website. Link to this page in your site’s navigation bar under a relevant section, such as “How to Get Involved” or “Giving Back.”
Lastly, your in-kind donations page should include instructions for where donors can drop off their contributions. (We’ll get into this more in the next section!)
3. Make it easy for donors to contribute.
Collecting in-kind gifts is an easy way to boost church giving and make donating more convenient since donors may already have the items you’re looking for on hand. Maximize the convenience of this giving avenue by simplifying the donation process. Ways to do this include:
Creating an online wish list. Use an online retailer’s website to develop a list of the items your church needs. That way, donors can easily add them to their cart and make a purchase, and you’ll receive the exact items you’re looking for.
Hosting an event. Gather your congregation for an eventand collect in-kind donations simultaneously. You may host an in-kind donation specific event, such as a food or clothing drive, or set up a collection bin at one of your existing fundraising or social events.
Providing multiple donation sites. As mentioned in the previous section, specify a location so donors know where to drop off their items. Try to offer multiple options within your church building and around your community so donors can contribute as conveniently as possible.
Picking up items from donors. For larger or heavier items, offer to have volunteers pick them up from donors’ homes. You can also offer this service to community members who are particularly busy and could use the extra helping hand to ensure you receive their contributions.
When promoting in-kind donations to your congregation, highlight all of these different options. People may be more willing to contribute when they know just how easy it is to participate in your campaign.
4. Track and record in-kind gifts.
After you’ve collected in-kind donations, you’ll need to record them for your own records and report them for compliance purposes. You must report in-kind donations separately from cash within your financial statements and record them in a separate revenue account within your chart of accounts.
Once you’ve determined an in-kind contribution meets recognition requirements, follow these steps:
Determine the item’s fair market value (FMV). FMV is the price you would pay for a good or service if you purchased it on the open market. Items with straightforward value are easiest to record. If you have one-of-a-kind items, ask the provider to estimate the FMV, and compare that number to the prices of similar items for sale online. For donations of services, you can either calculate the value based on the provider’s hourly rate or ask them how much they would usually charge for a similar project.
Record the contribution. Next, record the donation in a separate revenue account within your chart of accounts. You’ll record it as both a revenue and expense item to reflect that a donated good or service has no impact on your church’s net income.
Acknowledge the donor in writing. To receive tax deductionsfor donations worth $250 or more, the IRS requires donors to obtain a written acknowledgment from the organization they contributed to. Include your church’s name and employer identification number (EIN), the date you received the contribution, a description of the item or service provided, and a statement that the donor did not receive any goods or services in return for their contribution.
Report the gift on your Form 990. Some religious organizations are exempt from filing Form 990, but if your church typically files this form, you’ll report the contribution as part of your total revenue for the year. If you received any gifts of services or use of facilities, you’ll report these as reconciling items instead.
If you’ve never recorded and reported in-kind donations before, the process can seem a bit overwhelming. For extra support, partner with a nonprofit accountant who has previously worked with churches and other faith-based organizations. They’ll understand not only how the in-kind donation recording and reporting process works but also how to fulfill the unique needs of organizations like yours.
5. Thank your donors.
Just as you recognize those who contribute monetary gifts to your church, show in-kind donors you appreciate their support. While you may already have a donor recognition strategy in place, NXUnite recommends leveraging the following tactics:
eCards for an interactive and unique way to show appreciation
Thank-you letters, which you can handwrite for a personal touch
Donor recognition walls to publicly thank in-kind donors
Social media shoutouts to highlight in-kind donors to your broader community
Phone calls to thank donors of large in-kind gifts with a more in-depth conversation
No matter which strategies you use, leverage your constituent relationship management platform (CRM) to personalize your appreciation messages. Address your donors by name, acknowledge their specific contributions, and include details about their church involvement to individualize your thank-you notes.
In-kind donations can be extremely helpful in fulfilling your mission and offer an easy, convenient way for your congregation to support your church. It’s a win-win situation! Use these tips to collect, manage, and encourage in-kind donations to take full advantage of this revenue stream.
Managing In-Kind Donations: A Guide for Faith-Based Orgs
As a church leader, you likely have some experience with fundraising. Maybe you’ve hosted a silent auction event that brought your congregation together to bid on exciting items and experiences. Or, perhaps you’ve launched online fundraising campaigns that directed donors to show their support via your donation page.
Regardless of the fundraising efforts you’ve engaged in, you’ve probably focused mostly on collecting monetary donations. While cash can certainly help you fuel your mission and grow your church, it isn’t the only way donors can support your work.
In-kind donations are contributions of goods or services that can help you offset costs, diversify your revenue, and offer donors a convenient new giving method. Whether you want to strengthen your existing in-kind donation strategy or are developing one for the first time, the tips in this guide will help you collect and manage in-kind contributions according to accounting best practices.
1. Create a gift acceptance policy.
When you collect physical items, you need to lay some ground rules. Creating a gift acceptance policy prevents your church from receiving items you can’t use, such as expired items, broken or damaged goods, items with legal restrictions, or hazardous materials.
As YPTC’s nonprofit financial management guide explains, your policy should cover the following categories:
While you should always appreciate donors’ kindness, receiving gifts you can’t use places a burden on your church to return or dispose of these items. Developing a gift acceptance policy and sharing it with your supporters allows you to not only kindly turn down gifts you can’t accept but also reduce the number of unusable gifts you receive in the first place.
Don’t forget that in-kind donations also include gifts of time and energy in the form of professional services. Make sure to highlight any services your church could benefit from in your policy, such as web design, accounting, or legal services.
2. Develop an in-kind donations page.
Promote your gift acceptance policy by creating a dedicated in-kind donations page on your website. Along with your policy, this page may include the following elements:
Additionally, to give users a positive experience, your page should follow all web design best practices, such as,
Lastly, your in-kind donations page should include instructions for where donors can drop off their contributions. (We’ll get into this more in the next section!)
3. Make it easy for donors to contribute.
Collecting in-kind gifts is an easy way to boost church giving and make donating more convenient since donors may already have the items you’re looking for on hand. Maximize the convenience of this giving avenue by simplifying the donation process. Ways to do this include:
When promoting in-kind donations to your congregation, highlight all of these different options. People may be more willing to contribute when they know just how easy it is to participate in your campaign.
4. Track and record in-kind gifts.
After you’ve collected in-kind donations, you’ll need to record them for your own records and report them for compliance purposes. You must report in-kind donations separately from cash within your financial statements and record them in a separate revenue account within your chart of accounts.
Once you’ve determined an in-kind contribution meets recognition requirements, follow these steps:
If you’ve never recorded and reported in-kind donations before, the process can seem a bit overwhelming. For extra support, partner with a nonprofit accountant who has previously worked with churches and other faith-based organizations. They’ll understand not only how the in-kind donation recording and reporting process works but also how to fulfill the unique needs of organizations like yours.
5. Thank your donors.
Just as you recognize those who contribute monetary gifts to your church, show in-kind donors you appreciate their support. While you may already have a donor recognition strategy in place, NXUnite recommends leveraging the following tactics:
No matter which strategies you use, leverage your constituent relationship management platform (CRM) to personalize your appreciation messages. Address your donors by name, acknowledge their specific contributions, and include details about their church involvement to individualize your thank-you notes.
In-kind donations can be extremely helpful in fulfilling your mission and offer an easy, convenient way for your congregation to support your church. It’s a win-win situation! Use these tips to collect, manage, and encourage in-kind donations to take full advantage of this revenue stream.
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