Created in Partnership betweenthe Forum of Regional Associations of Grantmakers and TCC Group

In-Kind Contributions

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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

Section 1Introduction to In-Kind Giving

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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.

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In-Kind Giving: A Definition

Donations of products made by the company

Product Donations

Donations of other items that the company owns, i.e. land or office equipment.

Non-Cash Gifts

Donation of professional servicesPro-Bono Services

“In-Kind Giving” encompasses three major categories:

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“I need to know how to value our in-kind donations for tax

and reporting purposes.”

If You are Here…..

“We get requests for pro-bono service but we don’t have any policies in place yet. I want to

learn more about it.”

…then this workshop is for you!

“There has been negative press about companies ‘dumping

products’ on nonprofit organizations so we are leery of

making in-kind donations.”

“We have products to donate but I don’t know how to set up guidelines or a process to do

so.”

You are

here

Section 2Drivers for In-Kind Giving

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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

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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

Drivers for In-Kind Giving

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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

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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

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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

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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

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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

Section 3Trends in In-Kind Giving

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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

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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.

Section 3Best Practices in In-Kind Giving

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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

We’re going to start with product

donations

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Best Practices in Product Donation

Product Donations

Non-Cash Gifts

Pro-Bono Services

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Common Pitfalls in Product Donations

Companies must plan who will receive, distribute, and use the products in the short and long term

Lack of Planning

Donor companies must consider the local culture, climate, and beliefs

Products are Inappropriate for

Recipients

Companies must only donate products of the highest quality and usability

Low Quality / Expired Products

Product Donations

Non-Cash Gifts

Pro-Bono Services

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Questions to Ask Prior toDonating Products

Product Donations

Non-Cash Gifts

Pro-Bono Services

Do the individuals or organization actually need this product? 1

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?

2

Are these goods available locally? Will sending them undercut the local economy?3

Is the product appropriate for the local climate, culture, and belief system?4

Will the individuals or organizations receiving the donated goods be able to maintain or repair the items in the future?5

Is the item “valuable” to the recipient? Or will they sell it to buy something truly valuable to them? 6

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Best Practices in Non Cash Donations

Set and Communicate Guidelines and Policies

Anticipate the Unexpected

Create an MOU (Memorandum of Understanding) or contract

Product Donations

Non-Cash Gifts

Pro-Bono Services

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Common Pitfalls in Non Cash Donations

Companies must set very clear guidelines for eligibility and usage of items

Unclear Guidelines /

Policies

Donor companies must only donate items of the highest quality and usability for recipients.

Low Quality / Unusable Items

Product Donations

Non-Cash Gifts

Pro-Bono Services

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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? ________________________________________________________________________________________________________________

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Pro Bono Services

Product Donations

Our next topic, Pro Bono Services, is another example

of a true win-win for companies and nonprofits

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The Value Proposition for Pro-Bono Services

Company

Nonprofit Orgs Employees

Product Donations

Non-Cash Gifts

Pro-Bono Services

The Three Way Benefit of Pro-Bono Services

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Best Practices in Donation ofPro Bono Services

Product Donations

Non-Cash Gifts

Pro-Bono Services

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Common Pitfalls in Donations of Pro-Bono Services

Corporate employees can and will learn from the nonprofits they serve. Companies should tap into what they learn.

Viewing Services as a One-Way

Street

In many cases, corporate employees need training to help them bridge the differences between the for-profit and non-profit worlds

Lack of Training for Corporate Employees

Both parties should articulate exactly what is needed and what will be provided

Unclear Project Scope

Lack of Buy-In from Management

With support and encouragement from managers, employees will know the program is important to the company

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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?

Section 4Valuing In-Kind Giving

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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.

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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.

Section 5Getting Started: Building Your In-Kind Contributions Program

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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.

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Exercise: My Next Steps

Write down your next steps for building or considering an in-kind donations program at your company.

1. __________________________________________

2. __________________________________________

3. __________________________________________

4. __________________________________________

5. __________________________________________

6. __________________________________________

Section 6Additional Resources

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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