In-Kind Contributions
Created in Partnership between
the Forum of Regional Associations of Grantmakers and TCC Group
Outline of Presentation
I.
Introduction to In-Kind Giving
II.
Drivers for In-Kind Giving
III.
Trends in In-Kind Giving
IV.
Best Practices in In-Kind Giving
V.
Valuing In-Kind Giving
VI.
Getting Started: Building Your Guidelines for In-Kind
Giving
VII.
Additional Resources
2
Section 1
Introduction to In-Kind Giving
Main Points of the Presentation
• In-kind giving is a powerful strategy for solving social
issues. Companies have an opportunity – unique to
the corporate sector – to create real change through
this mechanism.
• In-kind donations, if done well, can increase the
capacity of nonprofit organizations, build a company’s
corporate citizenship reputation, lessen waste, bring
immediate relief in times of disasters, and target
valuable company expertise toward the social sector.
4
In-Kind Giving: A Definition
“In-Kind Giving” encompasses three major categories:
Product
Donations
Donations of products made by
the company
Non-Cash Gifts
Donations of other items that the
company owns, i.e. land or office
equipment.
Pro-Bono
Services
Donation of professional services
5
If You are Here…..
“We have products to donate
but I don’t know how to set up
guidelines or a process to do
so.”
“We get requests for pro-bono
service but we don’t have any
policies in place yet. I want to
learn more about it.”
You are
here
“There has been negative press
about companies ‘dumping
products’ on nonprofit
organizations so we are leery of
making in-kind donations.”
“I need to know how to value
our in-kind donations for tax
and reporting purposes.”
…then this workshop is for you!
6
Section 2
Drivers for In-Kind Giving
Drivers for In-Kind Giving
Why do companies do in-kind giving?
• Leverage the company’s products to benefit society
• Bring the company’s expertise to bear on important
social issues
• Demonstrate the company’s commitment to the
community
• Reduce waste
• Employee development
• Build new markets for products
8
Drivers for In-Kind Giving
Why do companies do in-kind giving?
 Leverage the company’s products to benefit society
• Bring the company’s expertise to bear on important
social issues
• Demonstrate the company’s commitment to the
community
• Reduce waste
• Employee development
• Build new markets for products
9
Drivers for In-Kind Giving
Why do companies do in-kind giving?
• Leverage the company’s products to benefit society
 Bring the company’s expertise to bear on
important social issues
• Demonstrate the company’s commitment to the
community
• Reduce waste
• Employee development
• Build new markets for products
10
Drivers for In-Kind Giving
Why do companies do in-kind giving?
• Leverage the company’s products to benefit society
• Bring the company’s expertise to bear on important
social issues
 Demonstrate the company’s commitment to the
community
• Reduce waste
• Employee development
• Build new markets for products
11
Drivers for In-Kind Giving
Why do companies do in-kind giving?
• Leverage the company’s products to benefit society
• Bring the company’s expertise to bear on important
social issues
• Demonstrate the company’s commitment to the
community
 Reduce waste
• Employee development
• Build new markets for products
12
Drivers for In-Kind Giving
Why do companies do in-kind giving?
• Leverage the company’s products to benefit society
• Bring the company’s expertise to bear on important
social issues
• Demonstrate the company’s commitment to the
community
• Reduce waste
 Employee development
• Build new markets for products
13
Drivers for In-Kind Giving
Why do companies do in-kind giving?
• Leverage the company’s products to benefit society
• Bring the company’s expertise to bear on important
social issues
• Demonstrate the company’s commitment to the
community
• Reduce waste
• Employee development
►Build new markets for products
14
Section 3
Trends in In-Kind Giving
Trends in In-Kind Giving
• In-kind giving is on the rise
• U.S. companies are more likely to give in-kind donations
internationally than domestically
• In-kind donations are most common – and noted by the
media – when a disaster has struck
16
In-Kind Giving by Industry
As expected, the health care industry does the highest percentage of giving
through in-kind donations, followed by consumer goods companies
Source: Committee Encouraging Corporate Philanthropy, Giving in Numbers, 2009.
17
Section 3
Best Practices in In-Kind Giving
Best Practices in In-Kind Giving
• Many companies have highly effective in-kind giving
programs, making tremendous impact on nonprofit
organizations and the communities and clients they serve.
• So how do you do it well?
Product
Donations
Non-Cash Gifts
Pro-Bono
Services
We’re going to
start with product
donations
19
Best Practices in Product Donation
Product
Donations
Non-Cash
Gifts
Pro-Bono
Services
Partner with nonprofit organizations for 2-way
communication
If for disaster relief, have a plan in place long before
disaster strikes
Have very clear guidelines as to which orgs can apply for
your products and how they can use them
Centralize the product donation function at your company
20
Common Pitfalls in Product Donations
Product
Donations
Non-Cash
Gifts
Pro-Bono
Services
Lack of Planning
Companies must plan who will receive,
distribute, and use the products in the
short and long term
Products are
Inappropriate for
Recipients
Donor companies must consider the local
culture, climate, and beliefs
Low Quality /
Expired Products
Companies must only donate products of
the highest quality and usability
21
Questions to Ask Prior to
Donating Products
Product
Donations
Non-Cash
Gifts
Pro-Bono
Services
1
Do the individuals or organization actually need this product?
2
Will sending these items make more work for the nonprofit agencies (paying
customs, storing items, shipping within the area, etc.) than making a cash
donation?
3
Are these goods available locally? Will sending them undercut the local
economy?
4
Is the product appropriate for the local climate, culture, and belief system?
5
Will the individuals or organizations receiving the donated goods be able to
maintain or repair the items in the future?
6
Is the item “valuable” to the recipient? Or will they sell it to buy something truly
valuable to them?
22
Best Practices in Non Cash Donations
Product
Donations
Non-Cash
Gifts
Pro-Bono
Services

Set and Communicate Guidelines and Policies

Anticipate the Unexpected

Create an MOU (Memorandum of Understanding) or
contract
23
Common Pitfalls in Non Cash Donations
Product
Donations
Non-Cash
Gifts
Pro-Bono
Services
Unclear
Guidelines /
Policies
Companies must set very clear
guidelines for eligibility and usage of
items
Low Quality /
Unusable Items
Donor companies must only donate
items of the highest quality and
usability for recipients.
24
Worksheet: Product and Non Cash
Donations
1. What products or other non cash donations does your company have
to donate? List all possibilities; get creative!
________________________________________________________
____________________________________________________
2. Who could you talk to in the nonprofit community to determine which of
your products or non cash donations would be most helpful to
organizations?
________________________________________________________
____________________________________________________
3. What are some possible uses of your products or non cash donations?
________________________________________________________
____________________________________________________
4. Which types of organizations / service areas are the most natural fit for
your donations?
________________________________________________________
________________________________________________________
25
Pro Bono Services
Product
Donations
Non-Cash Gifts
Pro-Bono
Services
Our next topic, Pro Bono
Services, is another example
of a true win-win for
companies and nonprofits
26
The Value Proposition for Pro-Bono
Services
Product
Donations
Non-Cash
Gifts
Pro-Bono
Services
Company
The Three Way
Benefit of ProBono Services
Nonprofit Orgs
Employees
27
Best Practices in Donation of
Pro Bono Services
Product
Donations





Non-Cash
Gifts
Pro-Bono
Services
Insure that Nonprofit Organizations are Ready and Able to
Use the Services
Plan for and Tap Into “Two-Way Learning”
Mutual Respect
Set and Communicate Guidelines and Policies, both
Internal and External
Commit for the Long Term
28
Common Pitfalls in Donations of ProBono Services
Viewing Services
as a One-Way
Street
Lack of Training for
Corporate
Employees
Unclear Project
Scope
Lack of Buy-In
from Management
Corporate employees can and will learn
from the nonprofits they serve.
Companies should tap into what they
learn.
In many cases, corporate employees
need training to help them bridge the
differences between the for-profit and
non-profit worlds
Both parties should articulate exactly
what is needed and what will be provided
With support and encouragement from
managers, employees will know the
program is important to the company
29
Checklist: Determining the Best Organizations
to Receive Your Pro-Bono Services
 Does the organization’s need fit with what your employees or
company has to offer?
 Does the organization have the time to work with and manage the
employees who will be providing the service?
 Has the organization utilized pro bono / outside help in the past and,
if so, did they have a positive experience?
 Will there be senior staff from the nonprofit involved in the project?
 Is the nonprofit’s board aware of and in favor of this work being done
by outside help?
 What will the organization do once your pro bono consultation term
has ended? Is this work sustainable in some other way?
 Who at the organization will be the contact person for this project?
 How long will it take to complete?
 How will we know when the project has been completed
successfully?
30
Section 4
Valuing In-Kind Giving
Valuing In-Kind Donations
• Product and equipment donations are covered by IRS
code 170(e)(3).
• Pro-bono services are not tax deductible.
• It is up to the donor to set the value of the products
donated, not the nonprofit recipient.
• The recipient, however, must provide the donor with a
receipt stating what exactly was received and what they
intend to use it for.
• The IRS limits a company’s tax deduction for donated
good to 10% of its taxable income.
32
Valuing In-Kind Donations
Corporations must value the donated items using a formula that takes
into account both the Fair Market Value (FMV) of the item – what the
selling or retail price would be – and the Cost Basis of the item – the cost
to the company of producing the item. The IRS allows a company to
deduct up to half the gain (mark-up) on an item, but not more than twice
what the company paid to make it or buy it.
An Example
If the cost of product is $200 and the fair market value is $500, the
difference between cost and FMV, or the “mark-up” on the product is
$300. Half of the mark up is $150.
The deduction would be $200+$150=$350.
33
Section 5
Getting Started: Building Your In-Kind
Contributions Program
Checklist for Starting In Kind Giving
 Get clarity about the business benefits you hope to
achieve with your program.
 Are you most interested in keeping products out of landfills or
focusing your employees on important causes?
 Solidify senior leadership buy in.
 Who needs to get on board to make this happen?
 Talk to your nonprofit community to understand their
needs.
 What kind of products or services do they need? How often do
they need them? How will it help them achieve their goals?
 Review the best practices in this presentation.
 Think “outside the box” about what your company can
provide in in-kind donations to the community.
35
Exercise: My Next Steps
Write down your next steps for building or considering an inkind donations program at your company.
1. __________________________________________
2. __________________________________________
3. __________________________________________
4. __________________________________________
5. __________________________________________
6. __________________________________________
36
Section 6
Additional Resources
Resources
•
•
•
•
•
•
•
•
•
The Taproot Foundation - www.taprootfoundation.org
The Pro Bono Action Tank - www.probonoactiontank.org
Points of Light Institute - www.pointsoflight.org
Foundation Center - www.foundationcenter.org
Committee to Encourage Corporate Citizenship www.effectivephilanthropy.org
Gifts in Kind - www.giftsinkind.org
Share Technology - www.sharetechnology.org
Donors Forum - www.donorsforum.org
Aid Thoughts - www.aidthoughts.org
38