31 Aug Valuing In-Kind Gifts
1 September 2026
By David Allen, Development for Conservation
Take an In-Kind donor to lunch this week.
For many land trusts, getting stuff for free can mean the difference between having what you need and not. Donations of furniture, office equipment, vehicles, printing, and services (especially legal and accounting) can be a Godsend. They can also make life difficult in some unforeseen ways. You should have a system in place for cultivating, soliciting, and acknowledging such “non-cash” gifts and gift donors. For new organizations, getting started on the right foot is important. For more established organizations, a systems tune-up might help.
Please note that I am not an attorney. Nothing I have written here, or in any part of this blog, is intended to provide legal advice. I always recommend that donors seek advice from a qualified tax advisor, and you should, too.
I think many people make in-kind donations more complicated than they need to be. It feels like it should be simpler.
Was it a donation of STUFF? Or TIME?
If it was STUFF, was it appraised by the donor, or can it be valued objectively (like stock, for example)? Or not?
If it was TIME, was the service time budgeted? Or not?
If it was a donation of STUFF that can be appraised (like land or jewelry or stock), advise the donor to consult with their financial advisors and have it appraised before they give it.
Thank them in an acknowledgment letter by describing what was actually given and without assigning any value to it. For example: an IBM Thinkpad laptop computer, or a Steelcase filing cabinet, or a dark blue 2016 Toyota 4Runner with 126,918 miles on it. How much they end up being able to deduct is then between them and the IRS.
If the donation was of TIME, the bottom line is that the value of that service is probably not tax-deductible, and it doesn’t matter what the billable hours might be worth. To claim a tax-deduction for work done, you must have been paid for that work in the first place.
It’s a bit of a harsh reality, but fundraisers run into this most often with art donated by the artist. Say someone gives you a painting that took then 20 hours to create. They claim its worth $800 – and it might be, if it were sold. But what they actually gave you was a piece of art paper and some oil-based paint. $19.95 on a good day. The frame might be worth $100 or so. But as far as the IRS is concerned, their time has no value. Sorry.
They could sell the art, of course, and donate the cash, but doing so just ends up being a wash for them. They have to report $800 in income and take $800 as a deduction.
The same is true for donated legal and bookkeeping services. And it’s true for any other volunteer activity – your time is not tax-deductible.
The other way this comes up is when time donors (aka volunteers) want to get “credit” for the time they contribute as if they had contributed cash. I had a Board Chair tell me in all seriousness that he should be recognized as a $10,000 donor because of all the pro-bono legal work he did for the land trust. (I told him he should invoice them for the services he provided, report the income, donate the value back in cash, and claim the deduction. It would have been cleaner that way.)
I’ve also seen situations where an organization wants to recognize time donors alongside cash donors by tracking their volunteer time as in-kind donations. Some organizations track volunteer hours, multiply by $25 or so, and report on the value of their volunteer labor as a cash equivalent. There isn’t anything unethical about doing this, but it feels cheap to me – like it actually undervalues both the volunteers’ labor and the donors who give money.
All that said, there is a time and a place for counting and even recognizing in-kind gifts of time. And that time is when the value of what is being given actually offsets a budgeted line item. Say a printing company donates the paper and ink to print your newsletter. And because they do it for free, you don’t actually need to spend the $2,000 on printing that you would have had to spend otherwise. As long as the printing expense was included in the budget, the in-kind gift can also be in the budget. The number that you put in the budget should be (approximately) what you would have had to pay for the printing otherwise.
Now stay with me here: This ONLY works at the budget level. The actual expense on the financials would still be zero (because that amount of money was never spent!), but it can still be budgeted for $2,000. With the in-kind contribution counting to offset it. This program also works for legal expenses. The Board member I referenced earlier could actually have been legitimately recognized as a $10,000 donor if the budget had included $10,000 in legal fees (to be offset with in-kind contributions).
This can be accomplished easily in your accounting software, but sometimes it is cleaner and clearer to go ahead and pay for the services you use and encourage the donor to make a tax-deductible contribution just like everyone else. In fact, this probably should be the preferred alternative.
Here are several other things to keep in mind:
- You are much more likely to get what you need if you ask for it than if you wait for it to be offered. Donors who offer stuff tend to give away things they are getting rid of anyway. Maybe its stuff you need, maybe not. In some cases, it might even cost you (time and/or money) to accept the gift. (Remember that just because a gift is offered doesn’t mean you have to accept it.) On the other hand, if you need a pickup truck or a file cabinet, someone out there might have one to spare.
- As a total aside, read the first sentence of the bullet above again and memorize it. It’s true for cash gifts also.
- Newsletter wish lists are fairly common ways to ask for what you need, but you can take a more direct route as well. Ask for coffee and meeting food from a local grocer, stewardship tools from a local home improvement store, or gift cards from any number of local vendors. I also suggest that you list the approximate value of the item you need when you do ask – someone might just give you $500 so you can go buy that printer you need.
- Keep quality in mind. Donated furniture that even Goodwill wouldn’t take won’t help you. Bad wine served at a donor event is still bad wine if it’s donated. And that international business attorney might not be the best person to draft your conservation easements.
In-kind gifts of goods and services would be a worthwhile discussion at a board meeting. Talk about the various points made here and see what questions come up. Make some decisions about the circumstances under which you might say Yes or No to an offer. Think through the things you might need and how you might go about asking for them. Write down your decisions and periodically review them.
I am NOT a tax advisor! And this should not be confused with actual legal advice.
Cheers, and have a great week.
-da
PS: Your comments on these posts are welcomed and warmly requested. If you have not posted a comment before, or if you are using a new email address, please know that there may be a delay in seeing your posted comment. That’s my SPAM defense at work. I approve all comments as soon as I am able during the day.
Photo by 58yigido58 courtesy of Pixabay.
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