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In-kind donations: how to record and acknowledge them
Updated September 2026
In-kind donations are gifts of goods or services instead of cash. Thank the donor by describing the item and the date, never its dollar value, and record donated goods on your books at fair value.
This is general information, not tax advice. Confirm valuation and bookkeeping questions with an accountant.
In-kind basics
| What it is | A gift of goods or services, not cash |
| Acknowledgment | Describe the item; do not state its value |
| Who values it | The donor determines the deductible amount |
| Donated services | Not tax-deductible for the donor |
What counts as in-kind
An in-kind donation is anything of value that is not money: donated goods (a laptop, supplies, an auction item), and sometimes services or space (a lawyer's pro bono hours, a donated venue).
How to acknowledge it
Describe the item, but do not put a dollar value on it. Valuing the gift is the donor's responsibility, not yours. Your acknowledgment should name what was given and the date, and say whether you gave anything in return. If you did, describe it and give a good-faith estimate of its value; if not, say so.
Donated services
Here is the part that surprises people: a donor cannot deduct the value of their donated time or services. Out-of-pocket costs tied to volunteering (mileage, supplies) may qualify, but the hours themselves do not.
Recording it on your books
For your accounting, donated goods are typically recorded at fair value as both revenue and a matching expense or asset. Donated services are recorded only under specific accounting conditions. An accountant can set the threshold for what you track.
Why bother tracking it
In-kind gifts show the true cost of running your programs and make your impact story fuller, the donated van and the pro bono design work are real support, even if no cash changed hands. Volunteer time is real support too. For a grant report or board packet, put a dollar figure on it with the volunteer hour value calculator. That figure is for the report, not your books or a donor receipt: volunteer hours go on your books only under the specific accounting conditions above.
Ember Giving
Record an in-kind gift with a description of what was donated, and Ember Giving drafts the thank-you for you: it describes the item and states no value, as the IRS expects. Add a line saying whether you gave anything in return. Year-end statements list gifts of goods without a value too. Unlimited users on every tier.
General information for people starting or running a nonprofit, not legal or tax advice. Rules change; confirm specifics with the IRS, your state, or a qualified professional.
Sources: IRS Publication 1771 · IRS, written acknowledgments · IRS, charitable contributions · councilofnonprofits.org. IRS pages read 27 September 2026.