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Home » In-kind donations: Nothing is better than free

In-kind donations: Nothing is better than free

by | Jan 29, 2024

Unique benefits of donations for nonprofits
include free in-kind advertising 

By Steve Edelman, President, Connect360

If you’re at a nonprofit, you may have heard about in-kind donations or gifts in kind. In our work with nonprofits, we’ve seen the difference that in-kind donations can make. If your vision of a gift-in kind donation centers around a used car or work slacks that no longer fit, it might be time to take another look including the unique benefits of donations for nonprofits through free in-kind advertising.

The Truth About In-Kind Donations

The truth is that in-kind donations offer a unique value to your programs. Individuals and businesses may not always be ready or able to make a cash contribution, but they often have goods and services you can use or turn into cash – including free in-kind advertising. 

For this reason, your nonprofit may want to expand its thinking to include things like free office space, goods and services and awareness exposure on television, radio, magazines and billboards. 

Five Unique Benefits of Gift-In-Kind Donations

Some nonprofits build their programs around in-kind donations. However, almost any nonprofit can use in-kind donations to: 

  • Reduce overhead expenses – gifts of office space, office supplies, computers, or legal services can reduce overhead expenses
  • Support fundraising – memorabilia, experiences, or valuable items can be raffled or auctioned to raise money for the organization. .
  • Convert to cash – though less common, gifts like securities, copyrights, patents and easements can be sold for a cash infusion.
  • Shine on rating sites – Nonprofit rating sites like Charity Navigator take you mission to overhead ratio into account. In-kind donations can help defray overhead costs.
  • Increase mission awareness – Donations of free advertising that can help you to promote your organization’s mission and support your fundraising efforts’

Using Free In-Kind Advertising Donations

If public service announcements aren’t already part of your nonprofit’s strategy, it might not realize what a big impact they can have on operating budgets and fundraising results. 

Just like a pharmaceutical company can donate medication to a clinic and a publishing company can donate unsold books to literacy programs, broadcasting stations have a long history of donating unsold air time to support local and national causes. The same goes true for print publications that carry advertising, and companies that provide billboard, transit, and even airport advertising.

When used effectively, in-kind advertising donations. can help to replace some paid fundraising expenses with free awareness outreach that promotes your organization’s mission. 

For example, in 2022, the organizations Connect360 helped received over $800 million in donated free advertising time from television and radio stations that ran their public service announcement messages, with a typical organization receiving over $5 million in free advertising and some in excess of $20 million. These were record numbers with no signs of decreasing. In fact, Nielsen found that stations ran 56% more TV PSAs in 2022 than just five years ago. (Early results indicate that TV and radio stations ran more free PSAs for our clients in 2023 than they even did in 2022.)

Here are the three steps that organizations need to do to benefit from this increase in available free advertising space:  

  1. Create a public service announcement as part of your awareness campaign.
  2. Distribute that announcement to broadcast stations across the country.
  3. Accurately track and value the airtime donations you receive.

That last step is often the most challenging for nonprofits because it takes specialized knowledge and industry information. I won’t get into the nitty gritty of the accounting practices here. 

What’s important is that public service announcements like all other in-kind donations are considered revenue and must be valued and reported on a nonprofit’s audited financial statements in accordance with Financial Accounting Standard Board (FASB) requirements and Generally Accepted Accounting Principles (GAAP). 

This can be a complex task, however, as the leading specialist in doing this for nonprofit organizations, CFOs, and CPAs, Connect360 makes it easy and takes care of everything. 

Since donated advertising time is usually used to promote the mission of a nonprofit, it is considered to be a 100% program-related expense. As such, advertising time raises the total percentage of financial resources that the organization spent on program-related expenses.

If you’re ready to explore how public service announcements can benefit your nonprofit, contact the PSA distribution experts at Connect360. 

 

Connect360 is a Capitol Communicator sponsor.

About the Author

Steve Edelman

Steve Edelman is a Partner and President of Connect360. He is a leading expert on the measurement, valuation, and financial reporting of Public Service Announcements by not-for-profit organizations. He is a CPA and has an extensive background in the application of Generally Accepted Accounting Principles (GAAP) to earned media valuations and in-kind donations nonprofits receive from broadcasting companies as part of their PSA campaigns. He is the author of numerous articles on the subject and has serves as a resource to nonprofit CFOs, their CPA firms, and professional publications.

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