Find out how to set up and record in-kind donations in QuickBooks Online.
A service or asset, other than cash, is an in-kind donation. It can be printing services, office supplies, furniture, leased space, or professional services.
Note: Check with your accountant to find out whether a donation should be recorded in your books as an in-kind donation, and if you are unsure of what the Fair Market Value of a donation is.
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.
- Go to Settings ⚙ and select Chart of accounts.
- In the Filter by name field, search for "In-kind donations".
- 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
- Go to Settings ⚙ and select Chart of accounts (Take me there).
- Select New.
- In the Account dialog, select Income from the Account Type ▼ dropdown menu.
- From the Detail Type ▼ dropdown menu, select Non-Profit Income.
- In the Name field, enter "In-kind donations".
- Select Save and Close.
Step 3: Create a clearing account
- Go to Settings ⚙ and select Chart of accounts (Take me there).
- Select New.
- In the Account dialog, select Cash at bank and in hand from the Account Type ▼ dropdown menu.
- From the Detail Type ▼ dropdown menu, select Current.
- Enter a name (for example, In-Kind Clearing) for the account.
- Select Save and Close.
Step 4: Create a product or service item
- Go to Settings ⚙ and select Products & services (Take me there).
- Select New and then Service.
- In the Product/Service information panel, add a Name and Description suitable for sales, pledge, or donation receipts.
- From the Income account ▼ dropdown menu, select the In-kind donations income account you created.
- Under Purchasing information, select the I purchase this product/service from a supplier checkbox.
- 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 (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. |
Step 1: Enter a sales receipt
- Select + New.
- Select Sales receipt.
- 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.
- In the Sales Receipt date field, enter the date of the donation.
- From the Deposit to ▼ dropdown menu, select the In-Kind Clearing bank account you created.
- Select the appropriate item from the ▼ dropdown menu of Product/Service column and add any additional Description.
- (Optional) Assign the Class associated with the donation.
- 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. - Select Save and close.
Step 2: Enter a bill
- Select + New.
- Select Bill.
- 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.
- Under Item details, select the product or service you created from the ▼ dropdown menu.
- (Optional) Assign the same Class you assigned on the sales receipt.
- Select Save and close.
Step 3: Mark the bill cleared
- Select + New.
- Select Pay bills.
- From the Payment account ▼ dropdown menu, select the In-Kind Clearing bank account.
- Select the checkbox of the bill you entered.
- Select Save and send.