If you’re in a leadership position at a non-profit, you’ve probably heard about in-kind donations or gifts in kind. Some nonprofits build their programs around these types of donations, others avoid them because they can be tricky to store, value, and manage.
In our work with non-profit organizations across the country, we’ve seen the difference that in-kind donations can make. If your vision of a gift-in kind donation centers around a used car or work slacks that no longer fit, it might be time to take another look. In-kind donations can make a substantive difference in the way you deliver services and operate as an organization.
The Truth About In-Kind Donations
The truth is that in-kind donations offer a unique value to your programs. Individuals and businesses may not always be ready or able to make a cash contribution, but they often have goods and services you can use or turn into cash. One survey found that 56% of all donors and 67% of high-wealth donors prefer to give goods and services. Donors tend to see in-kind donations as immediately useful and helpful.
For this reason, you may want to expand your thinking to include things like free office space, goods and services, and awareness advertising on television, radio, magazines, and billboards. Consider what your organization needs and how donations could make it possible.
Five Unique Benefits of Gift-In-Kind Donations
Some organizations build their programs around in-kind donations. However, almost any nonprofit can use in-kind donations to:
- Reduce overhead expenses – gifts of office space, office supplies, computers, or legal services can reduce overhead expenses.
- Support fundraising – memorabilia, experiences, or valuable items can be raffled or auctioned to raise money for the organization.
- Convert to cash – though less common, gifts like securities, copyrights, patents and easements can be sold for a cash infusion.
- Shine on rating sites – Nonprofit rating sites like Charity Navigator take your mission to overhead ratio into account. In-kind donations can help defray overhead costs.
- Increase mission awareness – Donations of free advertising that can help you to promote your organization’s mission and support your fundraising efforts.
How to Solicit Donations
Getting in-kind donations for your organization can be as easy as asking your board. Many board members have relationships in the community that might want to help but might not realize which resources the organization needs that they can provide. Letting them know is a smart first step.
Other ways to get the word out might include publishing a wish list, contacting the press, or sending a letter to existing donors. Even a banner on your website or a couple of social media posts can help spread the word.
There are also specialized organizations that create partnerships between organizations in need of support and the people and companies who have resources to provide.
Using Free In-Kind Donations of Advertising
If public service announcements aren’t already part of your strategy, you might not realize what a big impact they can have on operating budgets and fundraising results.
Just like a pharmaceutical company can donate medication to a clinic and a publishing company can donate unsold books to literacy programs, broadcasting stations have a long history of donating unsold air time to support local community and national causes. The same goes true for print publications that carry advertising, and out of home advertising companies that provide billboard, transit, and even airport advertising.
When used effectively, in-kind advertising donations. can help to replace some paid fundraising expenses with free awareness marketing that promotes the organization’s mission.
For example, in 2022 the organizations Connect360 helped received over $800 million in donated advertising time from television and radio stations that ran their public service announcement messages, with a typical organization receiving over $5 million in free advertising and some in excess of $20 million. These were record numbers with no signs of decreasing. In fact, Nielsen found that stations ran 56% more TV PSAs in 2022 than just 5 years ago.
Here are the three steps organizations need to do to benefit from this increase in available free advertising space:
- Create a public service announcement as part of your awareness campaign.
- Distribute that announcement to broadcast stations across the country.
- Accurately track and value the airtime donations you receive.
That last step is often the most challenging for non-profits because it takes specialized knowledge and industry information. We won’t get into the nitty gritty of the accounting practices here.
What’s important know is that public service announcements like all other in-kind donations are considered revenue and must be valued and reported on a nonprofit’s audited financial statements in accordance with Financial Accounting Standard Board (FASB) requirements and Generally Accepted Accounting Principles (GAAP).
This can be a complex task, however, as the leading specialist in doing this for nonprofit organizations, CFOs, and CPAs, Connect360 makes it easy and takes care of everything.
Since donated advertising time is usually used to promote the mission of a nonprofit, it is considered to be a 100% program-related expense. As such, advertising time raises the total percentage of financial resources that the organization spent on program-related expenses.
If you’re ready to explore how public service announcements can fit into your marketing and fundraising budget, contact the PSA distribution experts at Connect360.
About The Author
Steve Edelman is a Partner and President of Connect360. He is a leading expert on the measurement, valuation, and financial reporting of Public Service Announcements by not-for-profit organizations.
About Connect 360
Connect360 is a leading media placement agency driving measurable results for some of Charity Navigator’s highest-ranked nonprofits, well-known associations, government agencies and public relations/marketing firms.