Hook & Context
A donor drops off ten cases of bottled water at your office the morning of your fundraising walk. Another emails your ED offering "some office furniture we're getting rid of." A local law firm quietly bills your gala for zero dollars after providing $8,000 of legal work. A board member gives you their old MacBook and asks for a tax receipt.
Every one of those is an in-kind donation — and every one of them requires a different response. Get it wrong and you either annoy a donor, create a tax problem for your organization, or issue a receipt the CRA or IRS will not honor. Get it right and you unlock a category of support that most small nonprofits leave sitting on the table.
The numbers show how big that table is. According to Double the Donation's 2026 fundraising research, U.S. donors — including individuals, businesses, and government agencies — contribute roughly $58 billion in-kind to domestic and international nonprofits each year, with an estimated $18 billion of that in physical goods. On the corporate side, companies report more than 28% of their total charitable contributions come in forms other than cash. And 81% of individual donors say they contribute food or other goods in-kind — meaning your donor base is almost certainly already giving in-kind, whether you are tracking it or not.
Yet in-kind giving is the most inconsistently handled revenue stream in the sector. Small nonprofits routinely accept things they should have declined, decline things they should have accepted, issue receipts they cannot legally issue, and fail to receipt gifts that would have qualified. This is a solvable problem.
Insight & Analysis
In-kind donations get mishandled for two reasons: the rules feel intimidating, and the workflow rarely lives inside your CRM. Cash is easy — the donor gives you money, you enter the amount, the receipt is automatic. In-kind is messy. Someone has to decide whether to accept the gift, someone has to determine its value, someone has to write a receipt (or not), and someone has to enter it into your donor database so the person is properly credited and stewarded.
Most small nonprofits skip half those steps. The office furniture ends up in the storage room without a receipt. The law firm's pro bono work never gets acknowledged in the CRM, so the partner is quietly annoyed the next year. The MacBook gets a receipt for what the donor "thinks it's worth" — which is not how fair market value works.
Here is what the rules actually say. In Canada, the CRA defines a gift in kind as "a non-cash gift of property" — and critically, a gift in kind does not include a gift of services. That means pro bono legal work, donated marketing hours, or a plumber fixing your sink for free cannot be receipted, no matter how valuable. In the U.S., the same rule applies: the IRS does not allow a deduction for donated time or services, only for tangible property.
For property, both countries use the same concept — fair market value. The CRA defines FMV as "the highest price, expressed in dollars, that property would bring in an open and unrestricted market, between a willing buyer and a willing seller who are both knowledgeable, informed, and prudent, and who are acting independently of each other". If your organization cannot determine FMV, you cannot issue a receipt. Full stop.
The other trap most small nonprofits fall into is the deemed FMV rule. The CRA rule states that for certain non-cash gifts, the receipt must be issued for the lesser of fair market value or the donor's cost — applying when the donor acquired the gift less than three years before donating it, less than ten years if a main purpose was to donate it, or through a tax shelter arrangement. The office equipment your donor bought last year and gave to you? Receipt reflects what they paid, not what similar equipment is worth today.
These are not obscure rules. They are the difference between a compliant receipt and one that gets your charitable status flagged in an audit.
Actionable Steps
You do not need a specialized gift-in-kind department. Here is a practical five-step system any small nonprofit can install this quarter.
1. Write a one-page gift acceptance policy
Every in-kind decision starts with the same question: should we accept this? A gift acceptance policy answers that in advance so your team is not making it up on the spot. The policy should cover:
- What categories of goods you accept (event supplies, office equipment, program materials, etc.)
- What categories you decline (used clothing in most cases, real estate, vehicles unless you have a partner, anything requiring specialized handling)
- Who has authority to accept gifts above a certain value (usually the ED for anything over $1,000; the board for anything over $10,000)
- Your process for handling gifts you cannot use (offer to sell them and receipt the proceeds, or decline and thank the donor)
Post it on your website. When a donor calls with an offer, you have a professional answer ready.
2. Separate services from property in every conversation
Train your team to gently redirect service offers. "We appreciate the offer of pro bono legal work — we cannot issue a tax receipt for donated services, but we would love to formally acknowledge it in our annual report and steward you as an in-kind supporter." This distinction protects your organization from issuing an improper receipt while still honoring the donor.
3. Determine fair market value before you issue anything
For items under $1,000 in Canada, the CRA says a member of the charity or another qualified individual can determine FMV. The person doing the valuation should be "competent and qualified to evaluate the particular property being donated" — which means the summer intern is not qualified to appraise donated artwork. For items expected to exceed $1,000, the CRA strongly recommends a third-party professional appraisal, and the appraiser's name and address must appear on the receipt.
In the U.S., the IRS threshold for a qualified appraisal is $5,000 — any single item or group of similar items above that amount requires the donor to obtain a qualified appraisal and complete Section B of Form 8283.
Never let the donor tell you the value. Their number is a starting point, not the answer.
4. Log every in-kind gift in your CRM — even the ones you cannot receipt
This is where most nonprofits fall down. The pro bono legal work, the donated event space, the volunteer's mileage — none of these get a tax receipt, but all of them should be in your CRM as in-kind contributions with an estimated value. Why?
- Your donors are giving you real value. If you do not track it, you cannot steward them properly.
- Come year-end, your total support numbers are wildly understated when you exclude in-kind.
- When a board member asks "how much did the law firm contribute last year?", you need an answer.
- If a corporate donor gives you $2,000 cash and $8,000 in pro bono services, they are a $10,000 relationship — not a $2,000 one.
Create a dedicated in-kind gift type in your CRM with fields for description, estimated value, receipt-eligible (yes/no), and appraiser (if applicable). Run in-kind reports quarterly.
5. Match the acknowledgment to the situation
For receipted property gifts, the receipt must include the standard information plus three additional elements the CRA requires for in-kind: the date the gift was received, a brief description of the property, and the name and address of the appraiser if one was used.
For non-receipted gifts (services, low-value items, ineligible items), send a written acknowledgment letter that describes what was contributed, thanks the donor warmly, and specifically states that no tax receipt is being issued because the contribution was for services (or other reason). This protects you and stewards them at the same time.
In the U.S., the IRS requires nonprofits to provide a contemporaneous written acknowledgment for any noncash contribution valued at $250 or more, including a description of the property (but not a value), the date of the contribution, and a statement about whether goods or services were provided in return. For donations valued over $5,000 where the donor presents Form 8283 for signature, your role is to acknowledge receipt of the property, not to agree with the appraised value — the donor is responsible for the appraisal, not you.
Regional Insight: Canada and the U.S.
The Canadian rules around in-kind are stricter than the U.S. in one important way: if the FMV cannot be determined, no receipt can be issued at all. There is no "best guess" allowed. The deemed FMV rule also catches many well-intentioned donors off guard — the item they bought recently is receipted at cost, not current market value, unless it falls into an exempt category like publicly traded securities, real property in Canada, gifts made as a consequence of death, gifts of inventory, or certified cultural property.
In the U.S., the responsibility is largely on the donor to obtain appraisals and file Form 8283 — but the nonprofit still has significant duties. If your organization sells or disposes of receipted property valued over $5,000 within three years of receipt, you must file Form 8282, Donee Information Return, with the IRS and give the donor a copy. Miss that and you create a problem for both the donor and your organization.
Conclusion
In-kind giving is a real revenue stream that most small nonprofits treat like an inconvenience. The fix is not complicated: a written acceptance policy, a clear separation between property and services, a disciplined approach to fair market value, complete CRM tracking, and acknowledgment letters that match the situation. Install those five things and you will stop leaving money on the table, stop issuing receipts that create liability, and start stewarding the corporate partners, professional service donors, and event supporters who have been quietly propping you up for years.
Cash is easy. In-kind is where the operational maturity of your fundraising shop actually shows.
