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Intuit

How to record in-kind donations

In-kind contributions represent services or assets (other than cash) that have been donated to an organisation. For example, an in-kind donation might be printing services, office supplies, furniture, leased space, or professional services.

Before you can record an in-kind donation, you must set up an income account and clearing account for in-kind charitable contributions, and create a product or service item for the donations. You can then record the in-kind donation by creating a sales receipt and bill using the Fair Market Value (FMV) of the donation as the amount, and then clearing the bill.

Note:Check with your accountant to find out whether a donation should be recorded in your books as an in-kind donation, and consult with them if you are unsure of what the Fair Market Value of a donation is.

The steps in the following sections provide detailed guidance through each part of this process.

Set up in-kind donations

Before you enter an in-kind donation, you should set up the income account and clearing account and the product/service item needed to record the donation.

The following sections can help guide you through this process.

Create an income account to track contributions

The first step in setting up an in-kind donation is to create an income account to track contributions.

  1. Select Accounting from the left menu, then Chart of Accounts.
  2. Select New.
  3. In the Account dialog, select Income in the Account Type drop-down list.
  4. From the Detail Type drop-down list, select Non-Profit Income.
  5. Enter a Name (for example, In-Kind Contributions) for the account.
  6. Select Save and Close.

The account is created. The next step in the process is to create a clearing account.

Create a clearing account

The next step in setting up the ability to record in-kind donations is to set up a clearing account for such donations.

  1. Select Accounting from the left menu, then Chart of Accounts.
  2. Select New.
  3. In the Account dialog, select Bank from the Account Type drop-down list.
  4. From the Detail Type drop-down list, select Current.
  5. Enter a Name (for example, In-Kind Clearing) for the account.
  6. Select Save and Close.

The account is created. The next step is to create a new product or service item for each donation.

Create a Product/Service item for each donation

To properly record in-kind donations, you must create a product/service item for each donation.

  1. Select the Gear icon on the Toolbar.
  2. Under Lists, select Products and Services.
  3. Select New.
  4. In the Product/Service information panel, select the type of product or service.
  5. Add a Name and Description suitable for sales, pledge, or donation receipts.
  6. From the Income account drop-down list, select the In-Kind Contributions income account you created.
  7. Under Purchasing information, select the I purchase this product/service from supplier checkbox.
  8. Select Save and Close.

Once the accounts are set up and the product or service item is created, you can begin to record in-kind donations.

Record in-kind donations

When you record an in-kind donation, you must enter a sales receipt and create a bill for the donation, then mark the bill as cleared.

Note If you receive fixed assets (for example, vehicles, computers, or land) as an in-kind donation, use an expense or a fixed asset account on the bill. If you're not sure whether an item is a fixed asset, consult your accountant.
    The following sections can guide you through the steps to record an in-kind donation.

Enter a sales receipt

The first step in recording an in-kind donation is to enter a sales receipt for the donation, using the Fair Market Value (FMV) of the donation as the amount.

Note Consult your accountant if you are unsure of the Fair Market Value of a donation.
  1. Select the Plus icon (+) on the Toolbar.
  2. Under Customers, select Sales Receipt.
  3. In the Customer field, enter the donor's name.
    If this is a new entry, select Add, enter the donor's name, and select Save.
  4. Enter the Date of the donation.
  5. From the Deposit to drop-down list, select the In-Kind Clearing bank account you created.
  6. Select the appropriate item from the drop-down list in the Product/Service column and add any additional Description.
  7. (Optional) Assign the Class associated with the donation.
  8. Enter the fair market value (FMV) of the donation in the Amount field.
  9. Select Save and Close.

The sales receipt is created. The next step int he process is to create a bill for the donation.

Enter a bill

Once you have entered a sales receipt for the donation, create a bill for it.

  1. Select the Plus icon (+) on the Toolbar.
  2. Under Suppliers, select Bill.
  3. Enter the donor's name in the Supplier field, and add a period (.) or 1 after the name so the system will accept it.
  4. From the Product/Service drop-down list, select the same item you selected on the sales receipt.
  5. (Optional) Assign the same Class you assigned on the sales receipt.
  6. Select Save and Close.

Now that the bill has been created, the next step is to clear the bill.

Mark the bill cleared

The last step in recording an in-kind donation is to mark the bill you created as cleared.

  1. Select the Plus icon (+) on the Toolbar.
  2. Under Suppliers, select Bill.
  3. From the Payment account drop-down list, select the Clearing account.
  4. Select the checkbox of the bill you entered.
  5. Select Save and close.

The In-Kind Clearing account now has a zero balance and the donation is recorded.