Accounting
Nonprofit Accounting
Nonprofit Management
In-Kind Donations: How to Value, Record and Report Gifts in Kind
Last updated: October 7, 2026 · Independent guide · We do not sell rankings or coverage.
To record in-kind donations, you recognize contribution revenue at the fair value of the goods, services or use of facilities on the date you receive them, and you debit an asset (inventory, equipment) or an expense, depending on whether the gift is held or used immediately. Contributed services are recorded only if they create or enhance a nonfinancial asset or require specialized skills you would otherwise buy. Under ASU 2020-07, you then present these gifts on their own line in the statement of activities and disclose them by category in the notes.
The rule and the journal entries
The rule is the same for every type of gift in kind: debit the asset or expense the gift represents and credit contribution revenue, both at fair value at the date of receipt. Baker Tilly summarizes the measurement rule in ASC 958-605-30-11 as gifts in kind being “measured at fair value at the time of donation” (Baker Tilly, April 26, 2022). Fair value follows ASC 820, and the revenue sub-account should carry the category you will disclose.
| Account | Debit | Credit | Note |
|---|---|---|---|
| Inventory: donated goods | Fair value | Goods received and held for distribution or sale | |
| Contributions of nonfinancial assets: goods | Fair value | Use a sub-account per disclosure category (food, clothing, supplies) | |
| Program expense: donated goods | Carrying amount | When goods are distributed to beneficiaries | |
| Inventory: donated goods | Carrying amount | Relieves inventory on distribution | |
| Property and equipment | Fair value | Donated items above your capitalization threshold; depreciate as normal | |
| Professional fees (functional class) | Fair value | Specialized services consumed immediately | |
| Occupancy expense (functional class) | Fair rental value | Rent-free or below-market use of space | |
| Contributions of nonfinancial assets: services or facilities | Fair value | Credit “with donor restrictions” if the donor restricted use |
If the donor places a restriction on the gift, such as pharmaceuticals that may only be used outside the United States, credit the revenue to net assets with donor restrictions and release it when the restriction is met. The FASB’s own illustration in ASU 2020-07 includes exactly that example (FASB, September 2020).
Worked example: a food pantry’s year of in-kind gifts
The figures below are an illustration, not real data. A food pantry with a December 31 year end receives five gifts in kind during the year.
- Food. 10,000 pounds at an assumed wholesale rate of $1.80 per pound, or $18,000. By year end, 8,000 pounds ($14,400) have been distributed and 2,000 pounds ($3,600) remain in inventory.
- Laptop. Fair value $1,200, above the pantry’s $1,000 capitalization threshold, so it is capitalized and depreciated over three years ($400 a year).
- Furniture for resale. Used furniture with a fair value of $2,500 at receipt, sold for $2,500 under the pantry’s policy of selling items it cannot use.
- Legal services. An attorney spends 12 hours reviewing leases at a standard rate of $350 an hour ($4,200). The pantry would otherwise have paid for this, so it meets the specialized-skills test.
- Warehouse space. Rent-free space that would rent for $2,500 a month ($30,000 a year), used 85% for food distribution and 15% for administration.
Volunteers also give 600 hours sorting food. Sorting needs no specialized skills and creates no nonfinancial asset, so the pantry describes the hours in the notes rather than recording revenue.
The resulting entries are:
| Account | Debit | Credit | Note |
|---|---|---|---|
| Inventory: donated food | $18,000 | 1. Food received | |
| Contributions of nonfinancial assets: food | $18,000 | 1. Food received | |
| Program expense: food distribution | $14,400 | 1. 8,000 lb distributed | |
| Inventory: donated food | $14,400 | 1. Leaves $3,600 on hand | |
| Equipment | $1,200 | 2. Laptop | |
| Contributions of nonfinancial assets: equipment | $1,200 | 2. Laptop; depreciation of $400 a year follows | |
| Inventory held for sale | $2,500 | 3. Furniture received | |
| Contributions of nonfinancial assets: furniture | $2,500 | 3. Monetized category | |
| Cash / Inventory held for sale | $2,500 | $2,500 | 3. Sale at carrying amount, no gain or loss |
| Professional fees: management and general | $4,200 | 4. Legal review | |
| Contributions of nonfinancial assets: services | $4,200 | 4. Legal review | |
| Occupancy: program $25,500; management and general $4,500 | $30,000 | 5. Allocated 85/15 by use | |
| Contributions of nonfinancial assets: facilities | $30,000 | 5. Fair rental value |
The statement of activities shows $55,900 of contributed nonfinancial assets on one line ($18,000 + $1,200 + $2,500 + $4,200 + $30,000). Net assets are unchanged by the services and rent entries, because revenue and expense are equal. Program expense rises by $39,900 ($14,400 food plus $25,500 occupancy), which is why accurate valuation matters to any ratio a funder calculates.
The standards behind the entries
Recognition and measurement: ASC 958-605
ASC 958-605 decides whether and at what amount you record a gift in kind. For services, ASC 958-605-25-16 says contributions of services shall be recognized if they “create or enhance nonfinancial assets” or “require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation” (PwC Viewpoint, no date shown). PwC adds that if a provider normally discounts its rate for nonprofits, you use the discounted rate.
The CPA Journal lists accountants, doctors, lawyers and electricians as typical specialized providers (The CPA Journal, May 25, 2022). Donated use of facilities is measured at fair rental value (Baker Tilly, April 26, 2022).
Presentation and disclosure: ASU 2020-07
ASU 2020-07 changed presentation and disclosure only. It did not change recognition or measurement. It requires you to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from cash and other financial assets. In the notes, you disaggregate the amount by category and, for each category, disclose whether the assets were monetized or utilized (and in which programs), your monetization policy if you have one, any donor-imposed restrictions, the valuation techniques and inputs used under Topic 820, and the principal market used if a donor restriction prevents you from selling or using the asset in that market. The update applies to annual periods beginning after June 15, 2021, on a retrospective basis (FASB, September 2020).
The FASB example values food, clothing and household goods at US wholesale values and vehicles at the actual cash proceeds from their sale under a sell-on-receipt policy. Armanino’s illustrative note values food per pound using a cost study for Feeding America and allocates donated rent by square footage (Armanino, March 26, 2021). Armanino is an accounting firm that sells services to nonprofits.
How to report it
For the pantry, the footnote would list five categories, state that furniture was monetized and the rest utilized, name the programs, and describe each valuation input. The ASU says its disclosure requirements are not prescriptive on format, and its example shows two alternative formats, each with a table by category.
Your Form 990 may not match your GAAP total. The IRS instructions say the value of donated services or use of materials, equipment or facilities may not be reported as contributions on Part VIII, line 1. Noncash contributions go on line 1g, and if line 1g exceeds $25,000 you answer “Yes” on Part IV, line 29, and attach Schedule M (IRS Instructions for Form 990, 2025). In the example, line 1g would be $21,700 (food, laptop and furniture), so Schedule M would not be triggered by those gifts, even though the GAAP line is $55,900. Schedule M is also required for any gift of art, historical treasures or qualified conservation contributions, whatever the amount (IRS Schedule M (Form 990), 2025).
Your donor acknowledgment should include a description of donated property but not its fair market value. Donors need a contemporaneous written acknowledgment for any single gift of $250 or more, and donors generally cannot deduct the value of services they give (IRS Publication 1771, Rev. November 2023). If you sell or otherwise dispose of donated property within three years and the donor claimed more than $5,000 for the item or group of similar items, you must file Form 8282 within 125 days of the disposition, unless the donor stated on Form 8283 that the item’s appraised value was $500 or less or the item was consumed or distributed, without consideration, for your charitable purpose (IRS Form 8282, Rev. October 2021).
Common mistakes
- Using the donor’s figure unchecked. Your books need fair value under Topic 820, and you must disclose how you measured it.
- Recording general volunteer hours as revenue. Hours that fail both tests in ASC 958-605-25-16 are disclosed, not recognized.
- Recording at retail when the principal market is wholesale. The FASB example uses wholesale values for donated goods. Retail values inflate both revenue and program expense.
- Burying gifts in kind in “contributions.” ASU 2020-07 requires a separate line, and one revenue account makes the category disclosure manual.
- Forgetting functional allocation. Donated rent and services must be split across program, management and general, and fundraising, in the same way as purchased costs.
- Putting a value on the donor receipt. Publication 1771 asks for a description of property, not its value.
- Losing the trail on resold items. Without a link between the original gift record and the sale, you cannot tell whether Form 8282 applies.
How accounting and donor systems handle gifts in kind
Nonprofits that keep a separate donor database record the gift twice: in the donor database for stewardship and in the general ledger for the financial statements. Our guides to donor management software and nonprofit accounting software compare the systems in more detail.
QuickBooks Online. Intuit’s US help article has you create an “In-kind donations” income account (detail type Non-Profit Income), an “In-kind Clearing” bank account with an opening balance of $0, and a service item. You record a sales receipt to the clearing account at fair market value, a bill from the donor for the same amount, and a bill payment from the clearing account. For fixed assets such as vehicles, computers or land, the article says to use an expense or fixed asset account on the bill (Intuit, updated August 5, 2026). It takes three transactions per gift, and you need income sub-accounts per category if you want the ASU 2020-07 disclosure to come straight from the ledger.
Bloomerang. Bloomerang tells you to enter a zero amount, choose “In Kind” as the method and enter the estimated value in a Fair Market Value field, so in-kind gifts are not counted as actual dollars (Bloomerang, August 26, 2026). The value still has to be carried into your general ledger separately.
Raiser’s Edge NXT. Blackbaud’s help says you can add a gift-in-kind in the web view, as a single gift or in a batch, and enter its estimated value (Blackbaud, no date shown).
For logging pro bono and volunteer hours, see our guide to volunteer management software.
How we researched this
We read ASU 2020-07 in full, the IRS Form 990 instructions, Schedule M, Form 8282 and Publication 1771, and guidance from PwC, Baker Tilly, Armanino and The CPA Journal. We checked the vendor help pages cited on October 7, 2026. The worked example uses invented figures. It is not tax or audit advice, and your auditor should confirm valuation methods for material gifts.
Related guides
- Statement of Activities: Nonprofit Template and How-To
- Year-End Giving Statement: Requirements and Template
- Silent Auction Software: Mobile Bidding Platforms & Costs
Frequently asked questions
Do in-kind donations count as revenue for a nonprofit?
Yes. Under US GAAP, gifts in kind are contribution revenue measured at fair value when received, shown on a separate line from cash under ASU 2020-07.
Should I record volunteer hours as in-kind donations?
Only if the work creates or enhances a nonfinancial asset or requires specialized skills you would otherwise pay for, such as legal or accounting work. General volunteer time, such as sorting donations, is not recorded as revenue, though you must still describe the nature and extent of contributed services in your notes.
Do I put the value of an in-kind gift on the donor receipt?
No. IRS Publication 1771 says your acknowledgment should include a description of donated property but not its fair market value.
When does a nonprofit have to file Schedule M?
You file Schedule M if noncash contributions on Form 990, Part VIII, line 1g exceed $25,000, or if you received art, historical treasures or qualified conservation contributions. Donated services and use of facilities are excluded from line 1g, so the Form 990 figure can be lower than your GAAP total.
What happens if we sell a donated item?
You record the gift at fair value on receipt and then record the sale, with any difference as a gain or loss. If the donor claimed more than $5,000 and you dispose of the item within three years, you generally must file Form 8282 within 125 days.
Sources
- FASB, ASU 2020-07, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets, September 2020
- PwC Viewpoint, Not-for-profit entities guide, 7.5 Services provided by employees of affiliates or volunteers, no date shown
- Baker Tilly, Gift acceptance: Thanks for the gift! Now how do I report it?, April 26, 2022
- The CPA Journal, New Reporting and Disclosure Requirements for Contributed Nonfinancial Assets or Services, May 25, 2022
- Armanino, What Nonprofits Should Know About ASU 2020-07 Disclosure Requirements, March 26, 2021
- IRS, 2025 Instructions for Form 990, 2025
- IRS, Schedule M (Form 990), Noncash Contributions, 2025
- IRS, Form 8282, Donee Information Return, Rev. October 2021
- IRS, Publication 1771, Charitable Contributions: Substantiation and Disclosure Requirements, Rev. November 2023
- Intuit, Set up and record in-kind donations, updated August 5, 2026 (vendor documentation)
- Bloomerang, Enter in-kind donations, August 26, 2026 (vendor documentation)
- Blackbaud, Raiser’s Edge NXT Help: Add a Gift Record, no date shown (vendor documentation)
Sherman Hsieh
Independent analysis of enterprise software — ERP, CRM and more
