Grants, contracts, public funding, and earned revenue can provide important resources for community organizations, but they are rarely the only sources available.
Individuals, businesses, community organizations, institutions, and other supporters may contribute money, goods, facilities, professional expertise, technology, volunteer time, or other resources.
These contributions can strengthen an organization's capacity and diversify its resource base. They should be managed as carefully as other organizational resources, with attention to donor intent, gift restrictions, tax and accounting requirements, privacy, accessibility, mission alignment, and the actual costs associated with accepting and using a contribution.
What do we mean by contributions and in-kind support?
Financial contributions are voluntary gifts of money made to support an organization or charitable purpose.
Contributions may come from:
- Individuals
- Businesses
- Foundations
- Community organizations
- Faith and spiritual communities
- Other nonprofit organizations
Contributions may be unrestricted or restricted to a particular purpose, depending on the circumstances and the donor's instructions.
In-kind support generally refers to noncash resources contributed to help an organization carry out its work.
Examples may include:
- Equipment
- Supplies
- Facilities
- Technology
- Transportation
- Professional expertise
- Donated products
- Volunteer services
- Staff assistance provided by another organization
Noncash support can be extremely useful, but it should not automatically be treated as equivalent to cash. A donated resource may have restrictions, maintenance costs, storage needs, technology requirements, insurance implications, or limited usefulness.
Types of financial contributions
Unrestricted contributions
An unrestricted contribution generally gives the organization greater flexibility than a contribution restricted by the donor to a particular program or purpose.
Greater flexibility does not mean that the organization may use the money for anything whatsoever. Resources must still be used consistently with the organization's charitable purposes, governing responsibilities, representations made to donors, and applicable law.
Restricted contributions
Donors may restrict a gift to a particular:
- Program
- Project
- Geographic area
- Population
- Capital need
- Endowment
- Other stated purpose
Organizations should have systems for recording and honoring donor restrictions.
Before soliciting gifts for a specific purpose, consider what will happen if the organization raises more or less than expected or if the original activity later changes.
Recurring contributions
Some supporters choose to give monthly, quarterly, annually, or on another recurring schedule.
Recurring giving can improve predictability, but donors should be able to understand the schedule, change their contribution, update payment information, or cancel recurring gifts through a clear process.
Tribute and memorial gifts
Donors may contribute in honor or memory of another person or to recognize an event or milestone.
Explain how notifications will be handled and protect both donor and honoree information appropriately.
Major gifts
What constitutes a major gift depends on the size and fundraising history of the organization.
Major-gift fundraising often involves longer-term relationship-building and may require additional due diligence, gift agreements, financial planning, or board involvement.
Organizations should not provide individualized tax, legal, or investment advice unless they are appropriately qualified to do so.
Encourage prospective donors to consult their own professional advisors when a gift involves significant tax, estate, investment, or legal considerations.
Contributions connected with goods, services, or event admission
Sometimes a donor receives something in return for a payment.
Examples might include:
- Event admission
- Meals
- Merchandise
- Membership benefits
- Auction items
For federal tax purposes, a donor generally may deduct only the portion of a payment that exceeds the fair market value of significant goods or services received in return, subject to applicable rules and exceptions.
Charitable organizations also have disclosure responsibilities for certain quid-pro-quo contributions.
Tax deductibility and donor acknowledgments
Do not promise that every payment to a nonprofit is tax-deductible.
Tax treatment may depend on:
- Whether the organization is qualified to receive deductible contributions
- The type of gift
- Whether the donor receives goods or services in return
- The donor's tax circumstances
- Other federal or state requirements
A tax deduction, when available, is not the same as reducing a tax bill dollar for dollar.
Organizations should provide accurate acknowledgments and disclosures and allow donors to determine their own tax treatment.
Contributions of $250 or more
Under current federal rules, donors generally need a contemporaneous written acknowledgment from the charitable organization to substantiate a single charitable contribution of $250 or more.
Appropriate acknowledgment generally includes:
- The organization's name
- The amount of a cash contribution
- A description of noncash property contributed
- Whether the organization provided goods or services in return
- A good-faith estimate of the value of goods or services provided by the organization when required
For a noncash contribution, the charity generally describes the property in the acknowledgment rather than assigning it a tax value for the donor.
Quid-pro-quo contributions
When a donor makes a payment partly as a contribution and partly in exchange for goods or services, additional disclosure requirements may apply.
Organizations should understand these rules when conducting:
- Benefit dinners
- Performances
- Auctions
- Membership programs
- Other fundraising activities involving donor benefits
Raffles and games of chance
Raffles, bingo, lotteries, and similar activities should not be treated like ordinary charitable contributions.
Federal tax rules generally do not treat the cost of a raffle, bingo, or lottery ticket as a deductible charitable contribution.
Games of chance may also be regulated by state or local law and may require registration, licensing, reporting, or other compliance.
Types of in-kind support
Goods and equipment
Donated property may include:
- Computers
- Furniture
- Vehicles
- Program supplies
- Food
- Technology
- Equipment
Before accepting donated property, ask:
- Do we actually need it?
- Is it safe and functional?
- Is it compatible with our systems?
- What will installation cost?
- Who will maintain it?
- Do we have storage?
- What will eventual disposal cost?
- Are there licensing, security, accessibility, or environmental concerns?
A written gift-acceptance policy can help organizations decide consistently which noncash contributions they can use responsibly.
Facilities
Organizations may receive donated or reduced-cost access to:
- Meeting rooms
- Office space
- Event facilities
- Storage
- Specialized program space
Clarify scheduling, accessibility, insurance, security, maintenance, utilities, confidentiality, and responsibility for damage.
Professional and other services
Businesses, professionals, educational institutions, and community members may provide:
- Legal assistance
- Accounting
- Technology support
- Graphic design
- Printing
- Transportation
- Translation or interpretation
- Evaluation
- Other professional assistance
The value of a person's donated time or services generally is not itself deductible as a charitable contribution for federal income-tax purposes.
Certain unreimbursed expenses associated with charitable service may receive different tax treatment. Donors should determine their own eligibility.
Organizations should still track donated services when required for accounting, grants, management, or other legitimate purposes, using the applicable standards rather than assuming the donor can deduct that amount.
Volunteers and other personnel support
Volunteers, pro bono professionals, shared staff, interns, service-program members, and employees temporarily assigned by another organization may all contribute organizational capacity.
These arrangements require the same careful planning discussed elsewhere in the Community Tool Box:
- Appropriate role classification
- Supervision
- Training
- Confidentiality
- Safety
- Accessibility
- Insurance
- Continuity
Do not substitute unpaid labor for essential paid positions simply because volunteers or interns are available.
Why seek contributions and in-kind support?
To obtain resources needed for the work
Community contributions may provide flexible resources for:
- Programs
- Staff
- Administration
- Facilities
- Technology
- Evaluation
- Participant support
The value of a contribution lies in whether it helps the organization accomplish its mission, not simply in whether it was free.
To diversify resources
Donations can reduce dependence on a single grant, contract, or other funding stream.
Diversification can improve resilience, but every fundraising source also carries costs, restrictions, administrative responsibilities, and uncertainty.
To strengthen community relationships
Contributions may create additional opportunities for community participation and connection.
Do not treat donors as having ownership or special control over organizational decisions simply because they have contributed.
Maintain appropriate governance and avoid donor influence that conflicts with mission, participant interests, professional standards, or organizational independence.
To obtain resources that grants or contracts may not cover
Some restricted funding sources limit particular costs.
Flexible donations may help support important organizational infrastructure, but organizations should also seek grants and contracts that appropriately cover the full costs of the work rather than routinely relying on donations to subsidize underfunded agreements.
To meet matching or cost-sharing requirements
Some grants require recipients to contribute a nonfederal share of project costs.
Depending on the award, allowable cash contributions or third-party in-kind contributions may be counted toward that requirement.
Do not assume that every donated good or service qualifies.
For federal awards, contributions used for cost sharing generally must satisfy applicable requirements, including being verifiable in the recipient's records, allowable under the award, necessary and reasonable for accomplishing program objectives, and not counted toward another federal award unless specifically authorized.
Volunteer services and other in-kind contributions must also be valued and documented according to the applicable rules.
Always follow the specific notice of funding opportunity, award agreement, and current grant regulations.
When should you seek contributions and in-kind support?
Resource development should be ongoing rather than activated only when an organization faces a financial crisis.
During organizational and program planning
Create a resource inventory identifying:
- What you already have
- What is funded
- What is missing
- Which needs require cash
- Which needs could appropriately be met through noncash contributions
When beginning or expanding a program
Determine the full resources required before soliciting donations.
Do not build a program around promised in-kind support without considering whether that support is dependable enough for essential operations.
When useful resources become available
A business replacing technology, an institution offering meeting space, or a professional offering pro bono expertise may create a useful opportunity.
Evaluate it against your actual needs and gift-acceptance policy.
When managing cash flow
Cash flow describes when spendable money actually enters and leaves the organization.
An organization can have a balanced annual budget and still experience cash-flow difficulties when reimbursements, grants, pledges, or receivables arrive after expenses must be paid.
Contribution planning may help manage these periods, but operating reserves, realistic payment terms, financial forecasting, and other cash-management strategies are also important.
How do you solicit financial contributions?
1. Establish fundraising goals and responsibilities
Determine:
- What resources are needed
- How much you hope to raise
- What the funds will support
- Who will lead the campaign
- What staff, board, or volunteer capacity is available
- How results will be evaluated
2. Confirm fundraising compliance requirements
Charitable solicitation is regulated primarily at the state level in the United States.
Depending on where an organization solicits donations, it may need:
- Charitable-solicitation registration
- Annual renewals
- Disclosure statements
- Registration of professional fundraisers
- Additional compliance for raffles or other fundraising activities
Online fundraising may reach donors in multiple states, so organizations should understand which jurisdictions' requirements apply.
3. Develop a responsible donor and prospect strategy
Potential supporters may include:
- Current donors
- Former donors
- Volunteers
- Board members
- Community members
- Businesses
- Partner organizations
- People who have asked to receive organizational information
Do not automatically place every participant, friend, relative, business contact, or community member into a fundraising database.
Board members and staff may make appropriate introductions or personally contact people with whom they have genuine relationships.
Respect privacy and communication preferences.
4. Manage donor information responsibly
Collect only information that is relevant to legitimate fundraising, stewardship, financial, or compliance needs.
Donor systems may appropriately record:
- Contact information
- Gift history
- Gift restrictions
- Communication preferences
- Relationship history
- Appropriate publicly available information relevant to fundraising
Establish safeguards for:
- Access
- Passwords and accounts
- Payment information
- Data sharing
- Donor anonymity
- Opt-out requests
- Retention and deletion
More information is not automatically better information.
5. Select appropriate fundraising channels
Organizations may use:
- Secure online giving
- Direct mail
- Phone outreach
- Text messaging where appropriate
- Peer-to-peer fundraising
- Social media
- Events
- Personal major-gift outreach
- Recurring-giving programs
- Crowdfunding
Select methods based on audience preferences, consent, accessibility, cost, staff capacity, privacy, and evidence of effectiveness.
Direct mail
Direct mail can remain useful for some audiences.
Appeals should be:
- Accurate
- Respectful
- Clear about what support is being requested
- Clear about how funds will be used
- Accessible
- Consistent with applicable solicitation disclosures
Personal stories should be used only with appropriate informed permission.
Phone outreach
Phone fundraising may be useful in some settings but should respect communication preferences and applicable federal and state laws.
Professional fundraising vendors may be subject to additional telemarketing and charitable-solicitation requirements.
Maintain and honor organization-specific do-not-call requests.
Email, text, and digital fundraising
Digital fundraising should use secure systems and clear identification of the organization.
Provide appropriate information about:
- The organization
- The purpose of the appeal
- Payment security
- Privacy
- Communication preferences
- How to unsubscribe or opt out where applicable
Personal fundraising
Personal relationships may help prospective supporters learn about an organization.
Do not rely on social pressure or the idea that it is harder for someone to say no to a friend, family member, or business associate.
A donor should be able to decline without damaging the relationship.
6. Develop accurate fundraising messages
Appeals should explain:
- What the organization does
- Why the work matters
- What resources are needed
- How contributions will be used
- What outcomes or community benefits the organization seeks
Avoid exaggerated impact claims.
For example, do not say that a specific donation amount will provide a precise number of meals, services, or other outcomes unless the organization has a reasonable and current basis for that calculation.
7. Determine timing based on evidence
There is no universal best fundraising season.
Use:
- Donor history
- Cash-flow needs
- Campaign results
- Community events
- Staffing capacity
- Funding-cycle considerations
Review any restrictions contained in funding agreements, memberships, sponsorships, or other relationships rather than assuming that a particular organization's campaign rules apply universally.
8. Carry out the campaign
Use clear roles, secure giving systems, appropriate training, and consistent procedures for handling donations and donor information.
9. Evaluate fundraising performance
Consider:
- Gross revenue
- Net revenue after fundraising costs
- Response rate
- Average gift
- Donor retention
- Recurring giving
- Cost of donor acquisition
- Staff and volunteer time
- Complaints or opt-outs
- Accessibility
- Privacy or security concerns
Do not analyze donor groups using personal characteristics that are irrelevant to fundraising or would create inappropriate profiling.
10. Acknowledge and steward contributions
Thank contributors promptly and provide required acknowledgments.
Stewardship may include:
- Accurate receipts or acknowledgments
- Updates about use of funds
- Reporting on results and challenges
- Honoring donor restrictions
- Respecting anonymity and communication preferences
Stewardship should build trust rather than simply prepare donors for the next solicitation.
How do you solicit in-kind support?
1. Identify the actual resource need
Do not begin by asking, "What can we get for free?"
Ask:
- What does the organization need?
- What would we otherwise purchase?
- What specifications must the resource meet?
- Is a donated item or service appropriate?
- What costs will accepting it create?
2. Use a gift-acceptance policy
A policy can identify contributions that require additional review, such as:
- Real estate
- Vehicles
- Outdated technology
- Property with substantial maintenance costs
- Gifts with unusual restrictions
- Items that are difficult to value or sell
3. Identify appropriate prospective donors
Look for businesses, organizations, institutions, professionals, and community members whose resources and interests reasonably match the identified need.
Existing relationships may help, but donors should be able to decline without pressure or implied obligation.
4. Make a specific request
Explain:
- What is needed
- How it will be used
- Any technical specifications
- Whether an ongoing commitment is requested
- What acknowledgment, if any, the organization can provide
5. Evaluate the contribution before accepting it
Consider:
- Mission fit
- Usefulness
- Condition
- Accessibility
- Safety
- Maintenance
- Storage
- Insurance
- Technology and cybersecurity
- Restrictions
- Disposal
6. Document the contribution appropriately
Record the contribution according to applicable accounting standards, organizational policy, grant requirements, and other rules.
Do not automatically place a tax value on a donor's noncash contribution in the acknowledgment.
The IRS generally requires acknowledgment of noncash contributions of $250 or more to include a description of the contributed property, but not the organization's estimate of its value.
7. Document grant match separately when applicable
If an in-kind contribution will be used for a grant match, maintain the documentation required by that award.
Federal awards have specific rules governing the allowability and valuation of third-party in-kind contributions.
A value used for financial accounting, a donor's tax deduction, and a value allowed as federal grant cost sharing are not necessarily the same thing.
8. Thank and steward the contributor
Acknowledge the contribution, explain how it was useful when appropriate, and maintain the relationship respectfully.
Appreciation should not create an expectation that the donor must provide future contributions.
In Summary
Financial contributions and in-kind support can provide valuable resources for community organizations and can form one part of a diversified sustainability strategy.
Contributions may be unrestricted or restricted, one-time or recurring, financial or noncash. Organizations should clearly understand donor intent and accurately describe the potential tax treatment of contributions without acting as the donor's tax advisor.
In-kind support can include goods, facilities, equipment, technology, professional expertise, and other resources. A donated item is valuable only if the organization can actually use it safely and effectively. Gift-acceptance policies can help organizations avoid accepting donations that create more cost or risk than benefit.
Donated services require special care. The value of volunteer time or professional services generally is not deductible by the donor as a federal charitable contribution, even though organizations may need to track contributed services for accounting, management, or grant purposes.
Grant matching also has its own rules. Do not assume that every donated item, service, or volunteer hour can automatically be counted. Follow the specific award requirements and applicable cost-sharing and valuation rules.
Fundraising should respect donor choice, privacy, and communication preferences. Collect only information needed for legitimate fundraising and stewardship, protect it appropriately, and do not use personal relationships or participant stories to create pressure.
Fundraising channels have expanded beyond direct mail and phone solicitation. Organizations may use secure online giving, email, peer-to-peer campaigns, recurring donations, direct mail, events, phone outreach, social media, crowdfunding, and other approaches based on the audience and campaign.
Finally, measure the real value of fundraising and in-kind support. Consider not only the amount received but also fundraising costs, staff and volunteer time, donor retention, restrictions, maintenance costs, privacy and compliance responsibilities, and whether the resource actually advances the organization's mission.