Handling In-Kind Donations
Per IRS rules, the donor (or giver) determines the value of a non-cash contribution, not the church. Thus you as the ministry organization should always report these services, and in-kind donations, as $0.00.
It is because of this IRS rule that we offer the following steps to track an in-kind donation:
- Create a tax-deductible category called "In-Kind Donation" (or some similar name)
- On the Giving Screen, enter the transaction as a contribution with an amount of $0.00, and use the Memo field to write a description of what the item is.
If the gift is significant, you may also wish to send a separate letter acknowledging the gift.
- The resulting Contribution Statement will reflect a line item of $0.00 for the donated item, along with a description in the memo line referencing the item.
In ChurchTrac, your category for "In-Kind Donation" should always be $0.00. Even if a purchase receipt is submitted by the giver with a dollar figure, it's not relevant for this purpose, and you should still put $0.00 as the value of the contribution.
The only time the purchase receipt is relevant is if they want to be financially reimbursed for their contribution, and that would not qualify as a tax-deductible cash donation.