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Strengthen Your Bottom Line: Securing In-kind Donations

Strengthen Your Bottom Line: Securing In-kind DonationsHere’s the scenario:

You need to raise $750,000 to renovate your existing facility. Finding those first few dollars to get a capital drive underway is always tricky. You look at the overall capital budget and identify that you need about $90,000 in office equipment, furniture, and technology. If you start your campaign by securing in-kind product donations for these items, youll set the stage for leveraging cash support for the rest of the renovation. And the beauty of this approach is that writing the grant proposals for these types of product donations is fairly easy.

I have long been an advocate of identifying and securing gifts of products and services—also known as in-kind donationsas part of an overall funding strategy for any nonprofit organization. 

As we all know, almost every nonprofit in existence has received some sort of in-kind support, but few of us actually document that support and then use it to strengthen our bottom-line budget as well as leverage additional support. In fact, about 90  percent of the nonprofits that benefit from in-kind support do not document these contributions. Just think about the estimated value of volunteer time for 2017which was almost $25 per hour. How many hours of in-kind volunteer time could you have documented for 2017, but simply didn’t? 

There is no doubt that a well-developed, comprehensive in-kind donation program can strengthen the overall financial health of your organization, but how do you build out this program? 

Building a Solid Program

If you want to build a strong in-kind program, I recommend that you start by developing a reference manual that staff, board, and volunteers can refer to as needed. This manual should open with the IRS rules so that everyone can review the regulations that govern gifts of volunteer time and products. You should also include a page or so of your own organization’s policies and procedures. 

Having clear policies in place to guide any fundraising programwhether its grantseeking, special events, membership development, or in this case, an in-kind contributions programis always the right place to begin. And of course, these policies have to be reviewed and approved by your board of directors. 

For example, your accounting policies regarding in-kind gifts should establish that:

  • all donations are given consistent treatment;
  • donations are adequately documented and valued; and
  • donations are verifiable from the accounting records. 

You should also develop procedures that will guide staff and volunteers on how to track this information. You don’t want your in-kind contributions, particularly the value of those contributions, to be questionable, or it will be difficult to use this information to leverage cash support. 

Skills-Based Volunteering

Pro bono service, which is also known as skills-based volunteering, is a growing trend in corporate America. More companies are starting to draw on the skills of their top managers as yet another way to engage employees while giving back to their community. 

Skills-based volunteering goes beyond traditional days of service, in which a large group of employees joins a nonprofit for a few hours or a full day to clean up a park or paint a building. Instead you can now ask for highly trained assistance. For example, marketing experts could help with a re-branding effort, or IT experts could assess your technology needs and design the ideal infrastructure for your operating environment. This kind of high-level assistance can truly help nonprofit organizations grow in a considered manner without having to pay a consultant for guidance. Common Impact provides a great read about the topic of making the most of pro bono opportunities. 

Leveraging In-Kind Gifts

I’m no stranger to leveraging donations. In fact, I can honestly say I am a bit notorious when it comes to leveraging any sort of donation. 

I’ve been a fundraiser since the early 1970s in Alaskaand I have always leveraged donations, both cash and in-kind. I remember once I was scratching my head trying to figure out how my little, financially struggling organization was going to scare up $20,000 in order to make a down payment on the place we were renting. They were going to sell itand it was a good location for usnot to mention it would be smarter to make monthly mortgage payments than to pay rent. 

This woman walked into my officehanding me a $5,000 check. I asked her if I could use that check to leverage the additional $15,000 we needed to purchase the house. She was quite happy about that idea. So I spent the next two days on the phone asking anyone and everyone who had ever given us $500 or more if they could help me match her gift to raise the $15K I needed. I offered to set these donations up as no-interest loans that we’d pay off over time. 

Almost everyone said yes. By the end of the two days I had $20K to buy the house. And we eventually turned all of those no-interest loans into direct donations. 

We then put together a budget for needed renovations, and I used the $20K as leverage to secure donations of products and services via the local community. Our cash outlay for the renovation project was minimal. 

There are several very distinct reasons why you should be leveraging in-kind donations. 

Using the value of in-kind donations to strengthen the bottom line for your general operating budget and special project budgets is one way to be completely transparent when you are working with a grantmaker. Embracing the many different ways to reflect in-kind contributions as matching dollars for grant proposals can be a deciding factor in whether your organization, or another one, will receive support. 

And demonstrating in-kind donations of volunteer hours is a great way to build credibility about the work you do, as well as the need for the work you do. This can be particularly important when working with a grantmaker for the first time. They don’t really know who you are or the level of support that you have in the community. By documenting volunteer hours, you are demonstrating the extent of the commitment the community has made to your organization. 

Youre Invited to Learn More

I’ll go into depth on all of these topics, and more, during my upcoming webinar,Securing In-Kind Donations and Making Them Work for You, on September 20, 2018.

Strengthen Your Bottom Line: Securing In-kind Donations

Cynthia Adams is founder and CEO of GrantStation, a premiere online funding resource for organizations seeking grants throughout the world. Providing access to a comprehensive online database of grantmakers, GrantStation helps nonprofit organizations, educational institutions, and government agencies make smarter, better-informed grantseeking decisions. GrantStation is dedicated to creating a civil society by assisting the nonprofit sector in its quest to build healthy and effective communities.

Topics: In-kind Donations