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Gifts In Kind are when a donor gives you goods or services instead of cash (or cash equivalents, like cheques or credit card donations). For instance, they might give you a large quantity of food for a food bank, or donate their services as a professional gardener to your garden. (However, at least in Canada, you cannot give receipts for donated services, only for donated goods.)

 

Handling Gifts In Kind is can be a very complicated issue in many jurisdictions. Please be sure you understand the rules of your appropriate authorities, for example the Canada Revenue Agency (CRA) in Canada, or the IRS in the U.S.A., concerning them, before you decide how to handle them.

 

Canadian Receipts for Gifts in Kind

 

There are two main points to understand for Canadian charities who accept gifts in kind (which are further explained in the text below):

 

1.The donations must be entered with exactly "Gift in Kind" in the Cheque # / Paid By field, and must have a description of the gift in the Description field.

2.They are receipted separately, using the menu options on the Receipt ⇒ Gift in Kind Receipts sub-menu.

 

Many charities in Canada prefer not to accept Gifts in Kind (called "non-cash gifts" by the CRA) directly, for several reasons. Carefully documented valuation is required, especially for larger gifts, and some charities seem to feel that accepting Gifts In Kind is very likely to get you audited by the CRA. Instead, they recommend doing an exchange of cheques rather than accepting the Gift In Kind per se. You merely pay the donor for their goods or services, then they can issue you another cheque for that same amount, as a pure donation. It is that latter donation for which they will receive a receipt. Even in this case, where you pay them for the gift, our understanding is that you must be paying a fair market value.

 

The Amount entered for a Gift in Kind must be its fair market value. You cannot issue receipts for services received from a donor.

 

To be considered a Gift in Kind, a donation must have exactly "Gift in Kind" as its Cheque # / Paid By value. Also, you must enter something into the Description field for the donation, describing what was donated. (If the Description field is not displayed in your donation details area, you can set it to be displayed via an option on the Donations tab of the Maintenance ⇒ Main Window Options window.)

 

The Canada Revenue Agency requires that for all Gifts in Kind (which it calls "non-cash gifts"), the following fields must be added to the charitable receipt you issue:

 

- Description of Property

- Date of Donation (this is unlike regular receipts, where the year of donation is sufficient)

- Name and Address of Appraiser, if the item of significant value, and was appraised to determine the correct value.

 

If you do receive large enough donations that you need to have them appraised, you can enter the appraiser's name and address into the program. To do so, first go to the Donations tab of the Maintenance ⇒ Main Window Options window, and check the checkbox for "Drop-down arrow on the Description Field, for editing the Appraiser". Then, when editing the donation on the main window, be sure to set the Cheque # / Paid By field to "Gift in Kind", enter the Description, and then click the drop-down arrow on the Description field. A menu option pops up, and clicking on that causes a new window to pop up, allowing you to enter the appraiser information.

 

Important: For Canadian users, you will always have to do two runs of receipts, whether you are creating them for a single donor or all donors, if you have recorded both regular donations and gifts in kind. The Gift in Kind Receipts sub-menu appears as the last option on the Receipt menu, for Canadian users. The regular Receipt menu options only receipt for donations whose Cheque # / Paid By value is not "Gift in Kind", and the Receipt ⇒ Gift in Kind Receipts sub-menu options are used to create receipts for donations whose Cheque # / Paid By value is "Gift in Kind". Both must be used to generate all of your receipts!

 

One significant difference between the special Gift in Kind receipts and regular receipts is that when you create a regular receipt, it includes all donations from a given donor that are receiptable and have not yet been receipted. (Of course, that is excluding any Gift in Kind donations, if the above-mentioned option was selected.) When you create the special Gift in Kind receipts, each donation goes onto its own receipt, since the description of the donated item has to be included on the receipt. So if there are multiple Gift in Kind donations entered for a given donor, each one will get its own receipt and receipt number.

 

Canadian Gifts in Kind with Advantage

 

It is possible for a Gift in Kind to also have an Advantage - goods or services provided to the donor when they give the gift. A possible example would be if a donor donated a painting with a fair market value of $5,000, and the recipient charity paid them $1,000 for it. The $1,000 would be the Advantage, and $4,000 would have to be entered as the Eligible Amount for the donation. In addition, the Advantage Description field would have to be entered for such a donation describing the advantage received by the donor, since the Description field was used to describe the gift in kind itself. See Donations and Receipts with Advantage for details.

 

U.S. Receipts for Gifts in Kind

 

In the U.S.A., you can also do it as an exchange of cheques as is done in Canada. If you do want to accept Gifts In Kind directly, however, we understand that there are two slightly different situations. In one, the donor assigns a value to the gift, and you enter that value into DONATION. In the other, no value is assigned, and you do not want to enter that value into DONATION. In the latter case, you should enter the Amount of $0 when you enter the donation, and enter "Gift In Kind" in the Cheque No / Paid By field. (To be allowed to enter $0 for the Amount, you must check the "Allow $0.00" checkbox in the Donations tab of Maintenance ⇒ Main Window Options.) When you enter $0 for the Amount, you must also enter a Description, which will describe the goods or services you have received. You can also enter a Description if you do enter a real value for the Amount. You may also want to create one or more donation categories that are reserved for use with Gifts In Kind.

 

We are quite unclear what the receipts should look like for Gifts In Kind in the U.S.A. Our expectation is that you will need to do them using mail merge, with a custom-designed letter format. You will probably need two different letter formats for the case when you enter a real Amount for the gift, and the case where you enter $0. (In the latter case, we are told that you want to leave a space for the donor to enter the amount.)

 

Since mail merge receipts using custom formats are generally done after generating the built-in receipt from DONATION, you will probably want to make sure that regular cash (or equivalent) donations do not get mixed up in the same receipt number as Gift In Kind donations. To do that, if you have already got one or more unreceipted cash donations from a donor, and then they give you a Gift In Kind, generate the receipt for the cash donation(s) before entering the Gift In Kind donation. (All unreceipted donations from the same donor are always included on the same receipt.) Similarly, if you already have an unreceipted Gift In Kind donation, and then receive a cash donation, generate the receipt for the Gift In Kind before entering the cash donation.

 

Reporting Gifts in Kind Separately

 

Some users suggested in our survey on this topic that the Amounts of Gift In Kind donations should not add into the totals of reports on donations. We're sorry, but we did not make that change. It is not entirely clear to us that everyone would want the program to behave this way, and if we did exclude Gifts In Kind from the reports, we would need to provide a 2nd set of reports to only report on Gift In Kind donations. If you do want to generate donation detail reports that exclude (or only include) Gifts In Kind, you should be able to get this effect by using the Filter button on the reports window, filtering on either the Cheque No / Paid By field or the category description field (if you reserved one or more categories for Gifts In Kind). A sample filter would be for Reports ⇒ Donation ⇒ All Donations ⇒ Sort By Name. To view only the Gifts In Kind, enter the following filter:

 

 

To view only the regular donations, enter the following filter:

 

 

(The first row makes sure that donations with nothing in their Cheque No / Paid By field are still included.) For reports that give summaries by category, as long as you have reserved a category for Gifts In Kind, you can just subtract that category's total from the overall total, to get the total exclusive of Gifts In Kind.

 

One other user came up with a tricky way to separate Gifts In Kind from all other donations. She created a 2nd database, using Database ⇒ Switch Databases. Then she kept all normal donations in the 1st database, and put all Gifts In Kind in the 2nd database. However, this has some real issues, including needing to duplicate the Donor information, and having to ensure that you do not end up with duplicated receipt numbers in the two databases. (The latter problem can be handled by setting the "Starting Receipt Number" in the Maintenance ⇒ Receipt Options window for one of the databases, but please read the help topic on that carefully to understand the issues with doing so.)

 

 

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This topic was last edited on Mar 23, 2023