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Accounting For In-Kind Donations

Sarah   G's Profile

How do you account for in-kind board donations?

We have just begun managing a small non-profit trade association. I've taken the position that we need to track in-kind donations in the budget. I need to be prepared when (if) the numbers come in. How do others account for in-kind donations from board members? The donations are mostly meeting space and refreshments, wine and food for events, and occasionally covering travel expenses for a guest speaker at a meeting. But the budget is so small the in-kind contributions make a big difference. How do others account for these expenses and donations, both in the accounting software and in budgets? For the trade association we are just using quickbooks. Hopefully we can log it in the fiscal year that just began, and use it for budgeting next year.

Answers

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Does the non-profit have historical information you could use to see what prior years looked like in regards to amounts received from in-kind board donations? I think it would be easier to judge if you have information from the previous managers.

Or is this a brand new small non-profit trade association?

Sarah G
Title: bookkeeper
Company: TCS
(bookkeeper, TCS) |

It's not a new organization but our management of it is new. Previously in-kind donations were never tracked. I discovered this as part of the budgeting process, because there is no way they could hold the events they are holding on their budgets. Turns out almost everything is donated. We need to start tracking it for budgeting purposes (as well as because it is supposed to be tracked). But I'm a little stumped as to how to track them.

I'm thinking of creating a new credit account of in-kind donations. When someone donates, say $500 of wine for an event, I would credit the in-kind donations account and debit the account for that specific event. Then we would have a better idea of how much events cost and how are paying for them. Would that work?

We will ask for receipts or statements of giving (conference center rents for $XXX/day, donated for 3 days, etc.) so there will be a paper trail.

How do other people track this in quickbooks or other accounting software?

Are there other things I need to record? This sort of situation is new to me.

Thanks,
Sarah

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

It is the "fair value" of in-kind donations at the date of donation/pledge. If the item is sold (say auctioned), the difference between the initial value recorded and auction sale price is recorded as additional donation.

And yes, you have to do have to record and track them.

Suzanne Brooks
Title: Finance Director
Company: Dientes Community Dental Care
(Finance Director, Dientes Community Dental Care) |

We keep track of our in-kind donations, but we just book all of them at year end. It is a debit to In-Kind expenses- office supplies (as an example) and a credit to In-Kind Revenue. Both accounts have to say In-Kind so they are visible to the financial user. The entries will net to zero, so there is no impact on the bottom line. This is how our auditors have advised us.

Sarah G
Title: bookkeeper
Company: TCS
(bookkeeper, TCS) |

Thanks Suzanne, that is helpful. Especially to know the wording the auditors like to see.
I think we will do that and in the notes state what event each donation is for so we know for budgeting.

Sarah

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