An in-kind donation policy can be a useful tool to help charities achieve their target goals. Many charities have an in-kind donation policy that limits donations to items and services that are useful to their activities or to items that can be sold to raise money. Many in-kind policies also address internal issues such as how to assign a value to in-kind gifts, accounting procedures and the importance of giving recognition to the donors.
Accepting in-kind donations of items and other property can take a lot of work. Many charities limit in-kind contributions to specific items they need. For example, the American Red Cross does not accept donations of individual food items, but it may accept large, bulk donations of food that can be packed on pallets and shipped directly to a disaster area.
When a charity gets an in-kind gift worth $250 or more, it should send an acknowledgement to the donor. This shows appreciation for the gift and may allow the donor to claim a deduction on his income tax return. The acknowledgement should not place a value on the gift -- that is the responsibility of the donor. Instead, the acknowledgement should provide a description of the gift. If anything of monetary value was given to the donor as a reward for the gift, the value of the reward should be included in the acknowledgement.
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Keeping an account of the value of in-kind donations can help a charity in several ways. By including the value of in-kind gifts on its financial statements, a charity may be able to demonstrate more success toward its goals. The value of in-kind gifts can also be used to qualify for matching-fund grants in many cases. An in-kind donation policy should establish a guide as to how the charity assigns a value to any gifts.
A charity also may establish a policy regarding how in-kind donations of services will be recorded. The organization may want to set a value on specialized volunteer services such as legal assistance that it would normally have to pay for, while not assigning a monetary value to volunteer work that does not require specialized skills. Certain in-kind services also may help a charity qualify for matching-fund grants.
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