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 too 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 consulting 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.