VALUING
IN-KIND GIFTS
June
2007
Q:
I have a doozie of a question for you. We are in the
middle of applying for a grant. The Grant Administrator
told us that it was important to demonstrate that we
are leveraging resources. We were shown examples of
other applications concerning how they used leveraging
in daily operations. Some of the examples included in-kind
gifts that appeared to have been assigned a certain
value. My question is this: Is there some type of industry
standard for assigning an amount to in-kind gifts? Any
information you can provide will be greatly appreciated.
A:
The best source of information
on this is the Internal Revenue Service. They, after-all,
are the ones who make the rules. In short, they require
that the value of in-kind gifts be placed at fair market.
Since
fair market can sometimes be tricky, I went to CPA Sherry
Reed of the Lancaster Company in Key Biscayne, Florida
to get some real examples to share with you. Something
that has an established price – say printing or furniture
– is valued at the price for which it would normally
sell. The same would hold for consultanting services,
as long as the services are provided by a professional
acting in his or her professional capacity and the
organization would otherwise have had to purchase such
services. For instance, a lawyer providing pro bono
required legal advice would be considered to be giving
an in-kind gift of an amount equal to what any client
would be billed for similar services.
Donations
of food are often handled differently. Food banks tend
to put a single price per pound on all food, irrespective
of what different items might sell for in a grocery
store or restaurant. I suggest speaking to your CPA
if you feel in your case you should be able to ascribe
a different amount.
One
thing you cannot put a value on is volunteer hours,
other than the professional services noted above. While
we all recognize that the time volunteers give can mean
substantial savings for an organization in terms of
real dollars, the IRS does not consider their hours
to be in-kind gifts. Despite this legal restriction
you might want to make note of these hours as an addendum
to your grant proposal to give the funder a more thorough
picture of the support your organization receives. The
Independent Sector currently values volunteer work at
an average of $18.77/hr.
Since
the funder is most interested in seeing that you leverage
your resources you need to be able to show that you
are getting the greatest bang for your buck at every
turn. I suggest going back to the funder to ask for
additional examples of in-kind gifts that they have
seen over the years. You may find that you have more
to report than you thought you did.
