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Common examples of GIK are food, clothing, prescription drugs, equipment, and medical supplies. What are they used for? Individuals and businesses donate products to charities, which in turn give the products directly to those in need, or to other charities for redistribution.
Calculate the value of an in-kind donation by comparing the fair market sale price of similar items online or asking the donor to provide that information.
How should I recognize in-kind donations? Send the donor an acknowledgment that includes your tax ID number, a description of the goods and/or services they donated and the date you received them. This letter should also confirm that donors received no substantial goods or services in exchange for their contribution.
Generally, a donor may deduct an in-kind (or, non-cash) donation as a charitable contribution. And a donor must obtain a written acknowledgment from the charity to substantiate the gift, although the acknowledgment will generally not assign a dollar value to the donation.
In-Kind donations and the IRS The IRS considers in-kind donations to be a contribution, and the value of the donation is generally considered as its market value. The IRS allows you to deduct the fair market value of property donated. Only donations to registered 501(c)(3) nonprofits are eligible for a deduction.

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Accounting for In-Kind Donations Properly recording your organizations in-kind contributions is necessary not only for tax reporting, but also to comply with certain states regulations and the Generally Accepted Accounting Principles (GAAP).
Keep reading for our tips for writing a successful in-kind donation letter. Address the right person. Use an eye-catching image. Introduce your organization. Tell the business how theyll benefit. Keep your appeal letter short and simple. Thank them.
Give the donor a signed receipt that includes the donors name and signature, date of donation, description of the item or service, and the estimated value. Keep a copy of the donors receipt for the official grantee files.

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