When people hear the word “donation,” they often think of writing a check or making an online gift. But for nonprofits, support doesn’t always come in the form of money. In fact, some of the most valuable contributions are non-cash—and that brings us to a key question many organizations ask: what is an in kind donation?
In-kind donations play a vital role in helping nonprofits operate more efficiently, fill resource gaps, and stretch their budgets. This article breaks down what qualifies as an in-kind donation, what doesn’t, and how to properly track these gifts to stay compliant and audit-ready.
At its core, an in-kind donation is a contribution of goods or services instead of money. These donations provide direct value to your organization by offering something you would otherwise need to pay for. Common examples include:
The defining feature of an in-kind donation is that it replaces an expense your organization would normally incur.
To avoid confusion, it’s just as important to know what does not count as an in-kind gift. While generous, not every non-cash contribution meets the criteria.
Here are a few things that do not qualify as in-kind donations:
If you’re unsure whether a contribution counts, ask yourself: “Would we normally need to pay for this?” If the answer is yes, it’s likely in-kind.
Knowing what is an in kind donation is more than just good practice—it’s critical for accurate financial reporting, donor recognition, and compliance.
Here’s why it matters:
When recorded correctly, in-kind donations show the full picture of community support for your mission.
Understanding what is an in-kind donation is only the first step. Tracking these gifts accurately is just as important. Here's how to do it:
Understanding and documenting these gifts properly not only keeps your books clean—it strengthens your relationships with supporters and showcases the full breadth of community involvement.
For many nonprofits, in-kind donations are the unsung heroes of the budget—providing essential support without spending a dime. When managed well, they offer flexibility, reduce costs, and deepen partnerships. So the next time a donor offers something other than money, you’ll know exactly what to do—and how to say “thank you” the right way.
Need help setting up your books to handle in-kind donations? We work with nonprofits every day to streamline financial tracking and make audit prep a breeze. Let’s chat.
