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Recording in-kind donations received

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.

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

To set up an in-kind donation:

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

  1. Click the Gear icon > Chart of Accounts.
  2. Click New.
  3. Under Account Type:  select Income.
  4. Under Detail Type:  select Non-Profit Income.
  5. Enter a name such as In-Kind Contributions and click Save.

Next, create a clearing account to handle these transactions:

  1. Click the Gear icon > Chart of Accounts.
  2. Click New.
  3. Under Account Type:  select Cash and cash equivalents.
  4. Under Detail Type:  select Cash and cash equivalents.
  5. Enter a name such as In-Kind Clearing.
  6. Click Save.

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

  1. Click the Gear icon > Products and Services.
  2. Click New.
  3. Add a name and description suitable for sales, pledge or donation receipts.
  4. From the drop-down menu, select the income account, which will be the in-kind contributions account created above.
  5. Click Save.

When you receive the donation or contribution:

  1. Select + New.
  2. Select Sales Receipt.
  3. Enter the donor name.
  4. Record the date of the donation.
  5. Select the appropriate Product/Service and add any additional description.
  6. (Optional) Assign the Class associated with the donation.
  7. Enter the fair market value (FMV) of the donation in the Amount field. Note: Consult your accountant if you are unsure of what amount to enter.
  8. In the Deposit to drop-down menu, select In-Kind Clearing bank account you created earlier.

Finally, when you receive the goods and services donated:

  1. Select + New.
  2. Select Bill.
  3. Fill out the information, using the same Product/Service as you used in the Pledge. You'll have to change the supplier name slightly (such as adding a "." or "1" after the name) so that the system will accept it.
  4. (Optional) Assign the same Class.
  5. Select + New.
  6. Select Pay Bills to pay this bill from the In-Kind Clearing bank account.

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.

When you have completed these transactions, the In-Kind Clearing account should have a zero balance.

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