In-Kind Donations to a non-profit

cjnealanderson · ‎September 08, 2023

Our non-profit receives in-kind donations that we then sell at a silent auction at our annual fundraiser. I want to enter them as sales receipts so that the donors will be given credit for the items. When we were using QBO I followed the steps of entering a sales receipt, creating a bill, then paying the bill. I have the In-Kind Donations and In-Kind Clearing accounts set up. Now we are using QuickBooks Desktop and that does not seem to work. When I went through the same steps with QBD, an extra entry was left in the Clearing Account.

AileneA · ‎September 09, 2023

Hello, cjnealanderson.

In QuickBooks, the Donated Goods & Services account is typically used to track the value of goods or services that your business has received as donations. When you set up this account as an expense, it means that you are recording the value of the donated goods or services as an expense on your books.

The reason why the amount stays in the Donated Goods & Services account as a debit is because it represents an increase in the account's value. In accounting, debits are used to record increases in asset accounts, such as the Donated Goods & Services account. By debiting the account, you acknowledge that the value of the donated goods or services has increased. Also, donated goods are typically shown as a debit because they represent an expense for your business.

You may want to read this blog on how debit and credits work in QuickBooks: Debit vs. credit in accounting preference.

On the other hand, consult with a bookkeeper or accountant who can review your QuickBooks data and provide specific guidance based on your business's needs. If you're not affiliated with one, you can use our Find an Accountant tool to look for a Pro-Advisor near your area.

I've also added these links that you can read for your future reference in managing your transactions and accounts:

You can also check some customer/donor-related reports after recording your transactions. Here's an article for reference: Customize customer, job, and sales reports in QuickBooks Desktop.

You're welcome to post again if you have further questions or concerns. We're always available to help you. Have a great day!

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ReymondO · ‎September 08, 2023

Good day, @cjnealanderson.

I'm here to help you properly track your in-kind donations in QuickBooks Desktop (QBDT).

I've followed the same steps on how to set up and record in-kind donations from QuickBooks Online in my QBDT account.

From my end, I successfully zeroed out the balance in my clearing account using these steps.

In your case, I'd recommend reviewing your transactions (sales receipt and bill payment). Then, make sure that the clearing account you've set up has been selected as your designated bank account.

Doing this will ensure that the transactions are properly posted to the right accounts.

Furthermore, in QuickBooks Desktop, you have the option to generate and tailor reports to extract the most relevant and crucial information for your business.

Please feel free to leave a comment below if you have any other concerns or if you need further clarification regarding the recording of in-kind donations. I'm here to provide you with additional information.

cjnealanderson · ‎September 09, 2023

Thank you for your help and for answering so quickly!

My problem was the Bill. I had entered the Donation (Sales) Receipt and the Bill Payment using the Clearing account. Since the bill was not really for an expense, I used the Clearing account for it, too.

I set up a Donated Goods & Services account as an expense and used it for the bill. The Clearing account zeroed out then.

But, that brings up another question. That amount will now stay in Donated Goods as a debit. Won't that cause our expenses to be inflated? I read that Donated Goods is a functional expense, but it didn't really say how that affects the bottom line.

AileneA · ‎September 09, 2023

Hello, cjnealanderson.

In QuickBooks, the Donated Goods & Services account is typically used to track the value of goods or services that your business has received as donations. When you set up this account as an expense, it means that you are recording the value of the donated goods or services as an expense on your books.

The reason why the amount stays in the Donated Goods & Services account as a debit is because it represents an increase in the account's value. In accounting, debits are used to record increases in asset accounts, such as the Donated Goods & Services account. By debiting the account, you acknowledge that the value of the donated goods or services has increased. Also, donated goods are typically shown as a debit because they represent an expense for your business.

You may want to read this blog on how debit and credits work in QuickBooks: Debit vs. credit in accounting preference.

On the other hand, consult with a bookkeeper or accountant who can review your QuickBooks data and provide specific guidance based on your business's needs. If you're not affiliated with one, you can use our Find an Accountant tool to look for a Pro-Advisor near your area.

I've also added these links that you can read for your future reference in managing your transactions and accounts:

You can also check some customer/donor-related reports after recording your transactions. Here's an article for reference: Customize customer, job, and sales reports in QuickBooks Desktop.

You're welcome to post again if you have further questions or concerns. We're always available to help you. Have a great day!

cjnealanderson · ‎September 09, 2023

Thank you!

Maybelle_S · ‎September 09, 2023

Hi there, cjnealanderson.

I'm glad that my colleague was able to help you achieve your goal. Rest assured, we'll continue to provide the best customer service you'll ever experience.

Let me know if you have additional questions by replying to this thread. I'll be happy to assist you. Keep safe, and have a great day!

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In-Kind Donations to a non-profit