What are in-kind contributions, and how do I record them in the Cultural Data Profile (CDP)?
In-kind contributions are the monetary value of contributions given to your organization in the form of goods, services, land, buildings, use of space, etc. Examples of in-kind revenue are the value of a donated computer, the value of free brochure printing services, or the value of the rent for a donated space used by your organization.
What to count as in-kind
According to accounting rules, in order for a service to be considered an in-kind contribution, it must be a professional service performed by a professional in that field which your organization would have paid for had it not been donated to you. Examples of these services include a lawyer donating legal services, or a professional grantwriter waiving his or her normal fee to prepare your grant applications. For this reason, services such as ushering, letter-stuffing, general office help, and the regular duties of a board member, while valuable to your organization, cannot be included as in-kind contributions.
Whenever possible, the value of in-kind contributions must be what your organization actually would have paid for the item or service, rather than an estimated amount. In-kind services should be the hourly or contract fee the professional normally charges for that service. The value of donated goods must be the amount that was paid for them by the donor, or the amount your organization would have paid for them.
Enter in-kind in two places
In-Kind contributions are always recorded both under Contributed Revenue and as a corresponding expense, since they represent a donation of something the organization would otherwise have had to pay for. If you enter In-Kind contributions in the Revenue section of the CDP, make sure you are also entering an equal expense in the corresponding expense section. For example, if you were to include the donation of grantwriting services in the In-Kind Revenue line, you would make sure to include the same dollar amount in the Personnel Expense section under the Fundraising column.
If the in-kind contribution was of a capital item or asset such as a building or equipment valued above your organization's capitalization threshold, enter the corresponding amount in the Fixed Assets section of the Balance Sheet rather than under expenses.
Other things to remember about in-kind
In-kind contributions should typically be classified as unrestricted revenue, because the services or items were meant to be used immediately, but can be restricted in certain situations, such as the donation of a restricted fixed assets. Again, most in-kind contributions will be classified as unrestricted.
If your organization is audited or reviewed, include only the amount of in-kind revenue reported in your audit or review. If your organization is not audited or reviewed, only include in-kind items allowable under accounting rules, as summarized above.
If your organization has a parent organization, track the revenue portion of all in-kind contributions from your parent in the Parent Organization Support line in the Contributed Revenue section, instead of including them with the rest of your in-kind contributions. In-Kind contributions are not required to be included in your organization's Form 990, so you may notice differences between the Form 990 and other financial records related to In-Kind revenue.