Every kind of giving is valuable when it comes to corporate philanthropy, but one kind to keep in mind is in-kind. Contributions of goods and services, as opposed to cash grants, can provide an ideal opportunity for both the contributing company and the recipient nonprofit, enabling a donating company to be more generous than it might have been otherwise.
Whether it is delivered in the forms of goods, services or expertise, in-kind giving can be more recession-proof than cash gifts. If your company’s philanthropy budgets are tight, in-kind gifts may offer a more accessible giving pathway that allows your organization to flourish at giving back regardless of last quarter’s numbers.
This is because many in-kind donations are tax deductible. Although there’s no single formula that can determine the value of donated goods, the IRS’s Publication 561 is a guide to determining the fair market value (FMV) of donated property. The FMV is the agreed-upon price that the property would sell for on the open market between a willing buyer and seller. So, for example, technology organizations that use the nonprofit channel TechSoup to offer their products for free or at a discount to vetted 501(c)(3) charities can write off the fair market value or cost basis (whichever is less) of each item that is distributed. Bear in mind that not every in-kind donation is tax-deductible; donated services are generally not recognized by the IRS.
Beyond the tax implications, in-kind giving can draw out novel philanthropic ideas and encourage businesses to become more deeply engaged in the causes at stake.
For example, take a look at Cross Country Home Services (CCHS) in Florida, one of the nation’s leading, privately-held home warranty and home maintenance program organizations that provides service professionals to repair, replace and maintain home appliance systems.
Last year, even while times were still particularly tough, they partnered with United Way of Broward County to develop a unique campaign for veterans.
According to one survey, sixty-four percent of Americans don’t have enough cash on hand to cover a $1,000 emergency expense, which creates quite a problem when a major appliance breaks down. CCHS decided that it could leverage its partnerships with appliance manufacturers like Whirlpool, as well as its network of service providers, to make life a little easier for financially-strapped veterans. Thus was born Operation Appliance Aid, which provides new appliances – like washers, dryers, stoves and refrigerators – to eligible veterans and their families, thereby removing a stressful expense. The program has been such a success that CCHS was honored last year for its corporate social responsibility.
Save the Children, a global organization dedicated to creating lasting change for children in need, promotes a Gift-in-Kind program that has been enormously beneficial to its mission. For example, Boston Consulting Group is a major partner and has provided pro bono business consulting towards a different goal – improving the way we create change for children. Save the Children credits BCG with providing invaluable analysis and support during the nonprofit’s response to the earthquake in Haiti and flooding in Pakistan in 2012. Meanwhile, the children’s publishing and media company Scholastic has teamed with Save the Children to deliver a quality education through children’s book donations. Since 2001, Scholastic Book Clubs ClassroomsCare program, a school-based initiative that teaches children about the meaning and rewards of reading and giving, has donated more than 2.5 million books to Save the Children’s U.S. literacy initiative. And GlaxoSmithKline partners with STC through PULSE, a global employee volunteering program in which high-performing employees volunteer their professional expertise. Thanks to GSK, PULSE volunteers are sent to Save the Children offices in different communities around the world for months at a time and contribute their skills and experience to advance Save the Children’s mission.
Pharmaceutical companies are often at the top the list of in-kind donors – with leading companies giving away billions of products each year – and tech companies are also commonly generous at in-kind gifts. But if you think that your company doesn’t have goods or services that are easy to donate, think again. As an example of how simple in-kind giving can be, check out the typical request donation page below (this one’s from Boeing), which gives examples to its employees of how they can contribute to the company’s in-kind bottom line:
“Examples of in-kind donations include the following, although this will vary widely by site:
- Excess equipment (also referred to as capital assets and expense equipment): May include surplus office equipment, test and measurement equipment, machinery, computers, printers, etc.
- Services: Includes printing, photography, videotaping and editing, etc.
- Loaned labor: Formal arrangement whereby an employee with a particular expertise or skill works with a nonprofit organization on a short-term project or program.
- Auction items: Existing or purchased items that are given to a nonprofit organization to include in an auction to raise funds.
- Give-away items: Small, inexpensive — often Boeing-branded — items given to a nonprofit organization for inclusion in gift bags, for door prizes, etc.”
Every company has something to offer when it comes to in-kind donations. So don’t forget about the tremendous value of this form of giving, and apply a little thought and creativity to the question of how your business’s unique profile can be of distinct service to a nonprofit in your community. The possibilities are endless, and sometimes inspiring.