In-kind donations: How to value and record

A donor drops off a pallet of supplies, and now it's your problem to solve: what is it worth, and how does it hit the books? The gift is generous. The accounting is not obvious.

Valuation feels subjective, the recording rules are easy to get wrong, and auditors ask about exactly this. Record a gift at the wrong value or in the wrong place, and you've either overstated revenue or understated the support your programs actually received.

Handled well, it's a short, repeatable process: value the gift at fair market value, record it by type, and keep documentation that supports how the gift was valued and recorded. This guide walks through both the valuation and the recording, then covers how to put what you receive to work.

What are in-kind donations?

In-kind donations are noncash contributions given to a nonprofit: goods, services, or the use of property, rather than money. They show up everywhere in the sector, from a company donating laptops to a lawyer donating hours.

Common examples include:

• Donated goods: Supplies, equipment, food, or inventory an organization can use or distribute.

• Professional services: Legal, accounting, design, or other skilled work provided at no charge.

• Use of space or property: Free or discounted use of a venue, office, or vehicle.

Valuation and recording are where most of the difficulty sits, so the next two sections take them in turn.

How to value in-kind donations

In-kind gifts are valued at fair market value, the price the item would sell for on the open market as of the gift date. That's the figure your records are built on, so it's worth getting right.

The responsibility splits cleanly. The donor determines the value of their own gift for their tax purposes; the nonprofit records and describes the gift but doesn't set the donor's deduction. The IRS frames the substantiation this way, which keeps your organization out of a valuation it isn't required to make.

For method, lean on evidence: comparable sales or recent purchase prices for goods, and standard billing rates for donated professional services. Where a gift is unusual or high-value, document how you arrived at the figure so it holds up under review.

How to record in-kind donations

In-kind gifts are recorded as both revenue and a matching expense or asset at fair market value, so the contribution shows up in your financials without inflating cash. The steps are consistent across most gift types.

1. Recognition at fair market value: Book the gift at its fair market value on the date you received it.

2. Recording by type: Record contributed goods as revenue and either an asset or an expense. Contributed services are typically recognized only when they meet accounting recognition criteria—for example, when they create or enhance a nonfinancial asset or require specialized skills. Your finance team or auditor can confirm the right treatment. There's more on treating in-kind donation revenue if you want to learn more about recognition.

3. Documentation of the gift: Keep the donor, date, description, and how you valued it.

4. Disclosure in your statements: Report in-kind contributions in your financial statements as required.

Recording the offsetting revenue and expense is what keeps the gift honest in your books, showing the support received without suggesting you have cash you don't.

IRS rules and thresholds

The IRS sets substantiation thresholds that donors have to meet, and knowing them helps you give donors what they need. According to the IRS, a claimed noncash contribution over $5,000 generally calls for a qualified appraisal.

A couple of points to keep straight: the donation receipt you issue describes the item but leaves the valuation to the donor. The IRS notes that donated household items and clothing are generally expected to be in at least good used condition. Donors can confirm how this applies to their own return with a tax professional.

Disadvantages to weigh

In-kind gifts aren't free to accept. They carry handling, storage, valuation, and sometimes disposal costs, and a gift you can't use can cost more than it's worth. Weighing that up front saves trouble later.

• Set a gift acceptance policy: Decide in advance what you will and won't take, so you have a clear answer ready when an offer arrives.

• Decline gifts you can't use: A polite “No” protects your storage, your staff time, and your budget.

• Plan storage and distribution first: Before accepting bulk goods, confirm where they'll go and how they'll reach the people who need them.

Put donated goods to work

In-kind giving runs smoother when you can bring in the items you actually need and fill the gaps donations leave. A few Amazon Business capabilities can help.

• Bring in the right donations: Donation Driver can help you set up a curated wishlist, so donors buy the specific items you need and ship them straight to your organization.

• Standardize what you distribute: Business Lists (a Streamlined Purchasing feature) can help you build repeatable lists, so the items you hand out are consistent and easy to order.

• Fill the gaps: Where donations don't cover everything, bulk buying can help you order at volume from our broad business selection.

These are buying and giving tools. They aren't an accounting or tax tool, and the valuation and recording stay with your finance team.

Value gifts with confidence

Valuing gifts at fair market value and recording them by type is the whole job, and a gift acceptance policy prevents most of the problems before they start. Get those two habits in place and in-kind donations become a strength rather than a scramble.

From there, the work is operational: bringing in the goods you need and buying what donations don't cover. Setting up the tools to do that makes the generosity go further. If you're ready to sort out the buying and giving side, it's worth seeing how Amazon Business supports nonprofits, from the Amazon Tax Exemption Program to spend tracking and approval workflows that help manage grant funds.