Set up and record in-kind donations in QuickBooks Online

Find out how to set up and record in-kind donations in QuickBooks Online.

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

Note: You should check with your accountant to see if a donation should be recorded in your books as an in-kind donation.

Set up in-kind donations

To record an in-kind donation, you should set up an income and clearing account for charitable contributions, and create a product or service item for the donations.

Step 1: Check to see if you already have an in-kind donations account

To avoid creating duplicates, make sure you don’t already have a non-profit account to track in-kind donations.

1. Go to Settings ⚙ and select Chart of accounts.
2. In the Filter by name field, search for "In-kind donations".
3. If you find an account named "In-kind donations”, then your chart of accounts is already set up. No need to create an in-kind donations account. You can skip to Step 3.

Step 2: Create an in-kind donations account

If you don't have one, create a specific income account in the Chart of Accounts to track these donations or contributions:

1. Go to Settings ⚙ and select Chart of accounts (Take me there).
2. Select New.
3. In the Account dialog, select Income from the Account Type ▼ dropdown menu.
4. From the Detail Type ▼ dropdown menu, select Non-Profit Income.
5. In the Name field, enter "In-kind donations".
6. Select Save and Close.

Step 3: Create a clearing account

1. Go to Settings ⚙ and select Chart of accounts (Take me there).
2. Select New.
3. In the Account dialog, select Cash and cash equivalents from the Account Type ▼ dropdown menu.
4. From the Detail Type ▼ dropdown menu, select Bank.
5. Enter a name (for example, In-Kind Clearing) for the account.
6. Select Save and Close.

Step 4: Create a product or service item

Create a new Product/Service for each product or service that you receive in-kind:

1. Go to Settings ⚙ and select Products & services (Take me there).
2. Select New and then Service.
3. In the Product/Service information panel, add a Name and Description suitable for sales, pledge, or donation receipts.
4. From the Income account ▼ dropdown menu, select the In-kind donations income account you created.
5. Under Purchasing information, select the I purchase this product/service from a supplier checkbox.
6. 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, enter a sales receipt and create a bill for the donation, then mark the bill as cleared.

Note: If you receive fixed assets (such as vehicles, computers, land, and so on) as an in-kind donation, enter a bill and use expenses to debit the appropriate fixed asset (or you can create an item for fixed assets).  If you're not sure whether an item is a fixed asset, consult your accountant.

Step 1: Enter a sales receipt

When you receive the donation or contribution:

1. Select + New.
2. Select Sales receipt.
3. In the Customer field, enter the donor's name. If this is a new entry, enter the donor's name and then select + Add new and Save.
4. In the Sales Receipt date field, enter the date of the donation.
5. From the Deposit to ▼ dropdown menu, select the In-Kind Clearing bank account you created.
6. Select the appropriate item from the ▼ dropdown menu of 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.
   Note: Consult your accountant if you are unsure of the Fair Market Value of a donation.
9. Select Save and close.

Step 2: Enter a bill

Finally, when you receive the goods and services donated:

1. Select + New.
2. Select Bill.
3. In the Supplier field, enter the donor’s name. If this is a new entry, enter the donor's name and then select + Add new and Save.
4. Under Item details, select the same Product/Service as you used in the Pledge.
5. (Optional) Assign the same Class you assigned on the sales receipt.
6. Select Save and close.

Step 3: Mark the bill cleared

1. Select + New.
2. Select Pay bills.
3. From the Payment account ▼ dropdown menu, select the In-Kind Clearing bank account you created earlier.
4. Select the checkbox of the bill you entered.
5. Select Save or Save and close.