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Set up and record in-kind donations in QuickBooks Online

SOLVED•by QuickBooks•327•Updated January 15, 2024

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.

  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

Before you continue, make sure you’re in Accountant view.

  1. Go to Settings ⚙ and select Chart of accounts (Take me there).
  2. Select New.
  3. In the New account panel, select Income or Revenue from the Save account under ▼ drop-down menu.
  4. From the Tax form section ▼ dropdown menu, select Non-Profit Income or Non-Profit Revenue.
  5. In the Account name field, enter "In-kind donations".
  6. Select Save.

Step 3: Create a clearing account

  1. Go to Settings ⚙ and select Chart of accounts (Take me there).
  2. Select New. Depending on your account view, you’ll either see a panel labeled New account or New category. Select the option you see below for next steps.
  1. Select the Save account under ▼ dropdown and choose Bank Accounts.
  2. In the Tax form section ▼ dropdown, select Checking.
  3. In the Account name field, enter a name, such as In-Kind Clearing.
  4. In Starting date and opening balance, select a starting date and opening balance for the account. The opening balance can be $0.
  5. When you're done, select Save.
  1. Enter a name, such as In-Kind Clearing, for the account in the Category name field.
  2. In Select category, select Bank & credit cards, then choose Select.
  3. From the Account type ▼ dropdown, select Checking.
  4. In Starting date and opening balance, select a starting date and opening balance for the account. The opening balance can be $0.
  5. When you're done, select Save.

Step 4: Create a product or service item

  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 vendor 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 (for example, vehicles, computers, or land) as an in-kind donation, use an expense or 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

  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

  1. Select + New.
  2. Select Bill.
  3. In the Vendor 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 product or service you created from the ▼ dropdown menu.
  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 Clearing account.
  4. Select the checkbox of the bill you entered.
  5. Select Save and close.

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