Monday, March 25, 2013

In Kind Donations - What They Are and How To Raise Them

What are In Kind donations, why does an organization want them, and how does a nonprofit raise them?  

In Kind donations are unique, in nonprofit fundraising, as these donations are usually given based on a nonprofit asking for a specific item, for a specific need or use, for one of its specific programs or services.  In other words, to compare In Kind donations to other types of contributions that a nonprofit will raise, this will not be a monetary or capitol gift and will not be allocated to a general or overhead fund (as some funds raised are).

For example, let's say that you and I work in the fundraising (or development) office of a local emergency services nonprofit that is about to open its first, local, temporary housing for families displaced by natural catastrophes (such as floods, tornadoes, hurricanes, wild fires, and so on).  The building is almost complete.  Our nonprofit began planning this new service (temporary emergency housing for families) six years ago when it was discovered that no such service exists (no other nonprofit does this in our region) but has been increasingly in demand, locally, over the past eight years (independent, credible, and demonstrable studies found).  This sort of service fell within our nonprofit's mission statement and the board felt strongly (after discussing, debating, and voting on it) that our organization should provide it. 

The capital campaign (that raised the funds to build the new building of twenty condominiums), grant writing campaign (that helped fund the temporary housing program), major donors campaign (that provided large increment donations also specifically for this program) and other fundraising methods that directed a portion of money to or entirely went to this new program were planned out shortly after the board voted to indeed proceed with this new emergency housing service.  The fundraising plan was implemented and started five years ago.  The building was designed and a site located.  The building was built, furniture and other amenities (such as kitchenware, shower curtains and floor rugs, etc.) were purchased and installed inside, and so on until we arrived at today, which is about six month before our organization will officially open Home Away From Home (the temporary housing building of 20 condos).

So, back to our scenario and you and I at the office...

Today, at least six months before our new emergency housing's grand opening, you and I are going to begin the In Kind donations fundraising campaign for Home Away From Home.  For each condo, we are looking to raise the donations of: a microwave, a coffee/tea maker, a digital alarm clock, a land line telephone, a desk, a chair, hangers for the closet, an ironing board, an electric iron, and a hair dryer.  While we have twenty condos, we will want to have a few extras if each of these items on hand as we expect attrition.  So, we are raising twenty five of each of these items for each condo (and five extras to have on hand).

Notice that these items are smaller but still important and needed. 

We take a look at our list and do some research.  Do not send a solicitation letter requesting an In Kind item from everyone who has ever donated to your organization or to every business in town.  Consider your organization's resources, volunteer/employee time, and your donors' patience.  Approach only those potential donors who are likely to give the actual items your organization needs.  We take a look at which stores or other types of suppliers conduct business in the community that this emergency housing will serve.  Which sells or resells the actual items we need?  We then consider which of them would appreciate the opportunity to donate any of these items (in any amount that they can afford to) as it is a benefit to their business's public relations and marketing to be able to state (..."we donated x, y, and z to Home Away From Home local emergency housing"...) in any of their own advertising and press?  For instance, it helps to consider which of the businesses we might approach has donated to our organization in the past?  Which of those businesses have relationships with any of our board members or organization's active volunteers or executives?  Which of those businesses would benefit in the public's eye from being associated with our new program because perhaps they are in the same or a related business field (i.e., in this example, perhaps the emergency services industry, building industry, is a contractor, and so on?).  We think about this from all angles.  We consider what potential donors might want to be associated with our program because their field or business is similar to our program's but too, we want to look at the possible opportunity that our clients and their needs present to potential donors (to the extent that it is ethical and fair to ALWAYS, of course). 

For instance, in this particular scenario, we provide emergency temporary housing.  It is fair to assume that some of our future clients, who are home owners, will need builders and contractors names to consider as they and their insurance agents shop who should repair or even rebuild their damaged homes.  So, in this scenario, we offer potential donors who give needed new items for this program to our organization, not only a wonderful and positive public relations and marketing opportunity (as stated in the "we donated..." quote above) but too, we may decide to also add each donor to a list of potential contractors and builders for each of our home owner clients to consider for their needs in the future (which is neither endorsing nor guaranteeing anything to anyone except a bit of free marketing to potential clients.  I would be explicit if we offer a list to our nonprofit's clients stating something like, "These local businesses contributed to Home Away From Home, and so our organization is happy to make you aware of their names and local contacts' names.  Their being on this list is not an endorsement.  Any potential builder or contractor you choose to work with should be asked for references and investigated first, and considered against others before being selected.  Use contractors or builders at your own risk." [This is just an example of possible wording for the sake of clarity and is not a recommended phrase to protect your organization.  I am not an attorney.  Please do not use this phrase.  Always ask a lawyer or attorney for proper wording for all of your nonprofit's professional legalese.]  My point is your organization wants to promote those who have assisted it without becoming some middle man or referral agency!  Further, perhaps we are going to take out a page in our local paper and some online advertising to promote our new emergency housing program.  We additionally, could promise to provide all donors and sponsors of Home Away From Home a 'thank you' or be listed in a "partners" list, or something like that.  We need to look at what opportunities to assist these potential donors exist (from all angles) beyond just our receiving a contribution and their being able, after giving, to say 'we donated'.  The more - the better!

So, during our campaign, we need to develop a solicitation letter (complete with a response form enclosed, for the donor, should they choose to give), a way to follow through with each donor on each promise we make to them (i.e., if we are going to include them in a full page spread in the newspaper and have promised to list their business, we need to ask them to e-mail us their company's logo (and specify the format and size file you need) and then organize that so that we have their art on time and in the format that the paper requires).  We must keep records of what we solicited from which entities, and then of course, keep records on what we received, when, and from which donors.  Then, we need to pick the items up, get them to Home Away From Home, and installed correctly.  In response, we must send thank you letters to our donors stating, along with other required information, what the fair market price is of the item(s) they gave (according to the IRS's donation rules for In Kind items).  This thank you letter becomes the receipt for their donation when they claim the donation with the IRS.  Finally, we follow through on all promised public relations, marketing, and other benefits to our donors and finalized that (i.e. printers or newspapers will ask their customers to proof a final of an ad or a program brochure, etc.).  Time is of the essence in the success of these kinds of campaigns, so this all must be thought out and planned for in advance (including a timeline) and that timeline must be followed.  You don't want to drop the ball on a promise to a donor.  They tend to not give again if they feel they've been mistreated.

Often, it is helpful for the sake of determining the In Kind item's fair market value, to ask the donor what the fair market price is as a line item in their donation remittance form, if they choose to give, in response to our solicitation letter.

For instance, let's say we ask our local Home Depot for 25 new mid-range electric/tea makers "...for the benefit of local families displaced by natural disaster during their temporary housing." as the solicitation letter says.  Home Depot, by virtue of being a retailer, will have the "fair market price" of the item on hand as they obviously sell it.  Home Depot is a recognized well shopped vendor and so their "fair market price" is truly that.  For those donors who give items but are not themselves retailers, to discover the fair market price of say a desk and its chair, it is helpful to look online for what the going rate is for the item (the actual item), in the condition in which your organization received it (i.e. new, or gently used, etc.), on popular or commonly shopped retailers sites and use the average price.  Don't ever boost prices or use outlier (extremely high or extremely low) prices during this kind of research as these are neither "fair" nor "market".

In Kind items may seem like ancillary, odds and ends, or last minute items that a nonprofit need not plan the fundraising for but they truly are not.  They are important and so raising them must be fully planned out in advance.  Sometimes the difference between someone displaced, per our scenario, feeling at home or not is something as simple but comforting as being able to make coffee in their "home".  That is something that businesses are often happy to donate for a good and worthy cause.  For these reasons the In Kind contribution is both important to the beneficiary and to the entity that donates it.  So, it is worth conducting this campaign right (and then the nonprofit begins or maintains a positive relationship with both its clients and donors).

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