01 Nov How Nonprofits Can Create a Successful In-Kind Giving Strategy
Cash is king.
It’s understandable that most nonprofits would approach their fundraising goals with this mindset.
After all, cash gives you a lot of flexibility to execute on your mission as you see fit. It’s pretty painless to accept cash-based donations, even online. And cash donations make it easy to tout the level of supporting you’re getting.
But an all-consuming focus on raising cash can lead nonprofits to overlook one of the best ways to grow their operations, expand their reach, and increase their impact. That would be through in-kind donations, also known as gifts in kind or product donations.
Along with campaigns for generating cash support, consider developing a strategy for obtaining and leveraging donations of products and services. In-kind gifts may not be right for every nonprofit organization, but can be hugely beneficial to your overall mission when done right.
Here are some key factors to consider as you create your in-kind strategy:
In-kind can be better than cash
Yes, it’s true. In-kind donations can give you access to products that would cost a lot more if you bought them at retail prices. For example, at Good360, we are able to turn every dollar that’s donated into at least $10 in product by leveraging our strong network of corporate partnerships. Think about how product donations can help defray your operating expenses so you can do more with the cash you do have on hand.
Another way that in-kind can exceed the value of cash is when you’re able to obtain products that would be impossible or difficult to acquire through regular retail channels. This may include sophisticated or heavy equipment, medical supplies, or custom apparel. Also consider that you may be able to obtain product donations in much larger quantities than going to individual stores. (Learn how Good360’s Truckload Program delivers donations at scale.)
Be kind to in-kind donors
There’s a tendency in the nonprofit community to elevate cash donors over in-kind givers. That would be a mistake, says Bob Vickers, founder of Artful Askers and a longtime consultant who specializes in the in-kind industry.
What many nonprofits don’t consider is that in-kind gifts can be an excellent way to begin building a relationship with a donor. A corporate partner or individual giver may prefer to start working with a nonprofit by offering in-kind support. But there’s always the potential for that relationship to blossom into a fruitful, cash-based philanthropic endeavor — especially if the nonprofit does a good job of showing the impact that it’s making.
“In-kind giving can open a lot of doors for nonprofits,” Vickers says. “What people sometimes don’t understand is that in-kind donations can often be leveraged into other kinds of giving.”
Most of the wealth in the U.S. is held in non-cash assets. So, nonprofit organizations without an in-kind strategy “leave a lot on the table,” he says.
He also emphasizes that nonprofits should be prepared to give a proper thank you letter for in-kind gifts, which should include an IRS-acceptable receipt for the value of the goods being donated. In his experience, Vickers says less than 10 percent of in-kind donations are followed-up with a sufficient note of appreciation.
“If we were better stewards of the donations that we receive, I believe that we would see better support,” he says.
Align your in-kind requests with your actual needs
At Good360, we have long advocated for a purposeful approach to giving. We encourage corporate donors to take the time to understand the real needs of the communities that they’re trying to help before giving. On the flip side, we believe nonprofits should be thoughtful about approaching companies and start by assessing how partners could truly support their mission.
Because in-kind donations can be easier to get, the temptation for nonprofits is to take anything and everything that comes their way. That approach can not only lead to wasteful giving, but it could also damage relationships with potential partners.
“When creating an in-kind donation program, the goal is to be very strategic about what you’re asking for,” says Erica Gwyn, president and CEO of The Nonprofit Guru, which specializes in advising smaller nonprofits with operating budgets under $3 million. “Know when to say no. Not every donation is going to be a good fit for your organization.”
Gwyn recommends that nonprofit organizations start by making two kinds of wish lists: an “external” one that focuses on items that would directly benefit their client base, and an “internal” one for donations that would support their office staff and volunteers. For example, a nonprofit that helps the homeless might ask for blankets and clothes to hand out, but also computer equipment and printers to create marketing materials.
She advises nonprofits to dig deep, asking field workers, volunteers, and anyone who works very closely with constituents for their wish list recommendations. You may be surprised to learn what’s actually needed, as opposed to what you think is needed. For example, the homeless outreach agency may discover that there’s a big need for feminine products or play things to keep children occupied.
“Those things don’t come out unless you have a conversation with your team,” Gwyn says.
Be prepared to show real impact
Every time a donor decides to support a nonprofit organization, it’s an investment of time and money. In other words, donors always want to know whether they made a good investment or not.
As you would with cash donations, take the time to carefully track what in-kind donations you’ve received from which partners, how those products were distributed, and most importantly, what impact did they have your community. This could be done easily through an Excel or Google spreadsheet.
“Be intentional about tracking your metrics so that you’re aware of what your donors have given and how it was used,” Gwyn says. This data helps you to report back to the donor about the impact you’re making, and it also tracks your historical trends.
“So when it’s time to make a bigger ask down the line, you’re ready to talk to donors about creating an even stronger partnership,” she says. “You know what they’ve given each year and you can say, ‘We’d love for you to make a bigger impact this year.’”
The bottom line is that nonprofits should approach their in-kind giving with as much thought and intention as they do their cash-based fundraising. A well-planned in-kind strategy can be a huge boost to your operations and, ultimately, grow your impact.