In-Kind Contributions (Non-Cash Donations)

In-kind contributions are non-cash donations: volunteer hours, equipment, supplies, or professional services donated to your organization. NP Ledger records them at fair value so your books and 990 filing accurately reflect the full support your organization receives. Under GAAP, this category is formally called "contributed nonfinancial assets" (ASU 2020-07, ASC 958); the IRS uses "noncash contributions."

Non-cash donations are real contributions to your mission. A lawyer donating 10 hours of legal work has the same economic impact as writing a check for their hourly rate. Recording in-kind contributions ensures your financial statements show the true scope of support, which matters for grant applications, board reporting, and IRS compliance.

• Set up in-kind contribution categories before entering your first contribution. Go to Organization > In-Kind Contribution Categories and create categories for the types of non-cash contributions you receive (NP Ledger may have some defaults).
• Know the fair market value -- what you'd pay for the same item or service on the open market
• For volunteer hours: NP Ledger auto-fills the Independent Sector national volunteer rate, but you can enter your own rate

Step 1: Open the in-kind contribution entry form

Go to Quick Entry and select In-Kind Contribution as the transaction type. Or go directly to In-Kind Contributions > New Entry from the sidebar.

Step 2: Choose the category

Select the category for this contribution. Categories are grouped by type:

The category determines which fields appear on the form and how the value is calculated.

Step 3: Enter the quantity or value

• For volunteer hours: Enter the number of hours. The dollar value is calculated automatically using the rate assigned to the category. NP Ledger defaults to the Independent Sector national volunteer rate (a nationally published annual rate for valuing volunteer time), but you can set a custom rate per category.
• For equipment, supplies, or other items: Enter the fair market value -- what your organization would have paid to buy this item or service on the open market.
• For professional services: Enter the hours and the provider's normal billing rate.

Step 4: Add the donor and optional details

1. Select the supporter (the person or organization making the contribution). This is important -- the donor's name appears on giving statements and is needed for IRS reporting.
2. Optionally assign a fund if the contribution is restricted (e.g., "for the food pantry program").
3. Optionally assign a program or project.
4. Add a description for your records.

Step 5: Save

Click Save. NP Ledger automatically creates the journal entry: - Debits the appropriate expense or asset account (based on the category) - Credits the In-Kind Revenue account

You don't need to create journal entries manually -- the in-kind contribution form handles this.

Non-cash contributions have special IRS reporting rules that affect both you and the donor:

NP Ledger flags these thresholds on giving statements so both you and the donor know when extra documentation is needed.

Getting the value right matters for your financial statements and the donor's tax deduction:

• Volunteer hours (general): Use the Independent Sector national rate (updated annually). NP Ledger auto-fills this.
• Volunteer hours (specialized): If a professional donates their specialized skills (a lawyer doing legal work, an accountant doing your books), use their normal billing rate instead of the general volunteer rate.
• Equipment and supplies: Fair market value -- what you'd pay for the same item in its current condition. Used items are worth less than new.
• Professional services at no charge: The provider's normal billing rate for the same service.

Accountant Note: Per ASC 958-605-25, nonprofits must recognize contributed services only when they (a) create or enhance a nonfinancial asset, or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not donated. General volunteer time (event setup, envelope stuffing) typically does not meet recognition criteria for financial statements. NP Ledger categories allow recording both recognized and non-recognized volunteer time -- consult with your accountant about which should appear on your financial statements.

• The category and rate are correct for each entry -- a wrong rate changes the total value
• The supporter name is assigned -- giving statements need a name for IRS acknowledgment
• In-kind contribution revenue appears on your Statement of Activities under the correct fund
• For year-end, review total in-kind contributions by category to prepare for Schedule M of the 990 (required if noncash contributions exceed $25,000)

• Recording volunteer hours at minimum wage instead of the Independent Sector rate. The Independent Sector rate is typically higher and is the accepted standard for volunteer hour valuation.
• Recording an in-kind contribution with no supporter name. Without a name, the giving statement can't acknowledge the contribution, which the donor needs for their tax deduction.
• Forgetting to set up categories before entering in-kind contributions. Go to Organization > In-Kind Contribution Categories first. Without categories, the form doesn't know how to calculate values or create the right journal entries.
• Not distinguishing recognized from non-recognized volunteer time. General volunteering is valuable but may not meet GAAP recognition criteria. Track it, but discuss with your accountant whether it belongs on your financial statements.

Open the AI Help panel and try: - "How do I record a donation of volunteer hours?" - "What rate should I use for in-kind donations?" - "When is Form 8283 required?"