Created in Partnership between the Forum of Regional Associations of Grantmakers and TCC Group In-Kind Contributions

2 Outline of Presentation I. Introduction to In-Kind Giving II. Drivers for In-Kind Giving III. Trends in In-Kind Giving IV. Best Practices in In-Kind Giving V. Valuing In-Kind Giving VI. Getting Started: Building Your Guidelines for In-Kind Giving VII. Additional Resources

Section 1 Introduction to In-Kind Giving

4 Main Points of the Presentation In-kind giving is a powerful strategy for solving social issues. Companies have an opportunity – unique to the corporate sector – to create real change through this mechanism. In-kind donations, if done well, can increase the capacity of nonprofit organizations, build a company’s corporate citizenship reputation, lessen waste, bring immediate relief in times of disasters, and target valuable company expertise toward the social sector.

5 In-Kind Giving: A Definition Donations of products made by the company Product Donations Donations of other items that the company owns, i.e. land or office equipment. Non-Cash Gifts Donation of professional services Pro-Bono Services “In-Kind Giving” encompasses three major categories:

6 “I need to know how to value our in-kind donations for tax and reporting purposes.” If You are Here….. “We get requests for pro-bono service but we don’t have any policies in place yet. I want to learn more about it.” …then this workshop is for you! “There has been negative press about companies ‘dumping products’ on nonprofit organizations so we are leery of making in-kind donations.” “We have products to donate but I don’t know how to set up guidelines or a process to do so.” You are here

Section 2 Drivers for In-Kind Giving

8 Drivers for In-Kind Giving Why do companies do in-kind giving? Leverage the company’s products to benefit society Bring the company’s expertise to bear on important social issues Demonstrate the company’s commitment to the community Reduce waste Employee development Build new markets for products

9 Why do companies do in-kind giving?  Leverage the company’s products to benefit society Bring the company’s expertise to bear on important social issues Demonstrate the company’s commitment to the community Reduce waste Employee development Build new markets for products Drivers for In-Kind Giving

10 Drivers for In-Kind Giving Why do companies do in-kind giving? Leverage the company’s products to benefit society  Bring the company’s expertise to bear on important social issues Demonstrate the company’s commitment to the community Reduce waste Employee development Build new markets for products

11 Drivers for In-Kind Giving Why do companies do in-kind giving? Leverage the company’s products to benefit society Bring the company’s expertise to bear on important social issues  Demonstrate the company’s commitment to the community Reduce waste Employee development Build new markets for products

12 Drivers for In-Kind Giving Why do companies do in-kind giving? Leverage the company’s products to benefit society Bring the company’s expertise to bear on important social issues Demonstrate the company’s commitment to the community  Reduce waste Employee development Build new markets for products

13 Drivers for In-Kind Giving Why do companies do in-kind giving? Leverage the company’s products to benefit society Bring the company’s expertise to bear on important social issues Demonstrate the company’s commitment to the community Reduce waste  Employee development Build new markets for products

14 Drivers for In-Kind Giving Why do companies do in-kind giving? Leverage the company’s products to benefit society Bring the company’s expertise to bear on important social issues Demonstrate the company’s commitment to the community Reduce waste Employee development ► Build new markets for products

Section 3 Trends in In-Kind Giving

16 Trends in In-Kind Giving In-kind giving is on the rise U.S. companies are more likely to give in-kind donations internationally than domestically In-kind donations are most common – and noted by the media – when a disaster has struck

17 In-Kind Giving by Industry As expected, the health care industry does the highest percentage of giving through in-kind donations, followed by consumer goods companies Source: Committee Encouraging Corporate Philanthropy, Giving in Numbers, 2009.

Section 3 Best Practices in In-Kind Giving

19 Best Practices in In-Kind Giving Many companies have highly effective in-kind giving programs, making tremendous impact on nonprofit organizations and the communities and clients they serve. So how do you do it well? Product Donations Non-Cash Gifts Pro-Bono Services We’re going to start with product donations

20 Best Practices in Product Donation Partner with nonprofit organizations for 2-way communication If for disaster relief, have a plan in place long before disaster strikes Have very clear guidelines as to which orgs can apply for your products and how they can use them Centralize the product donation function at your company Product Donations Non-Cash Gifts Pro-Bono Services

21 Common Pitfalls in Product Donations Companies must plan who will receive, distribute, and use the products in the short and long term Lack of Planning Donor companies must consider the local culture, climate, and beliefs Products are Inappropriate for Recipients Companies must only donate products of the highest quality and usability Low Quality / Expired Products Product Donations Non-Cash Gifts Pro-Bono Services

22 Questions to Ask Prior to Donating Products Product Donations Non-Cash Gifts Pro-Bono Services Do the individuals or organization actually need this product? 1 Will sending these items make more work for the nonprofit agencies (paying customs, storing items, shipping within the area, etc.) than making a cash donation? 2 Are these goods available locally? Will sending them undercut the local economy? 3 Is the product appropriate for the local climate, culture, and belief system? 4 Will the individuals or organizations receiving the donated goods be able to maintain or repair the items in the future? 5 Is the item “valuable” to the recipient? Or will they sell it to buy something truly valuable to them? 6

23 Best Practices in Non Cash Donations Set and Communicate Guidelines and Policies Anticipate the Unexpected Create an MOU (Memorandum of Understanding) or contract Product Donations Non-Cash Gifts Pro-Bono Services   

24 Common Pitfalls in Non Cash Donations Companies must set very clear guidelines for eligibility and usage of items Unclear Guidelines / Policies Donor companies must only donate items of the highest quality and usability for recipients. Low Quality / Unusable Items Product Donations Non-Cash Gifts Pro-Bono Services

25 Worksheet: Product and Non Cash Donations 1. What products or other non cash donations does your company have to donate? List all possibilities; get creative! ________________________________________________________ ____________________________________________________ 2. Who could you talk to in the nonprofit community to determine which of your products or non cash donations would be most helpful to organizations? ________________________________________________________ ____________________________________________________ 3. What are some possible uses of your products or non cash donations? ________________________________________________________ ____________________________________________________ 4. Which types of organizations / service areas are the most natural fit for your donations? ________________________________________________________ ________________________________________________________

26 Pro Bono Services Product Donations Non-Cash Gifts Pro-Bono Services Our next topic, Pro Bono Services, is another example of a true win-win for companies and nonprofits

27 The Value Proposition for Pro-Bono Services Company Nonprofit OrgsEmployees Product Donations Non-Cash Gifts Pro-Bono Services The Three Way Benefit of Pro- Bono Services

28 Best Practices in Donation of Pro Bono Services Insure that Nonprofit Organizations are Ready and Able to Use the Services Plan for and Tap Into “Two-Way Learning” Mutual Respect Set and Communicate Guidelines and Policies, both Internal and External Commit for the Long Term Product Donations Non-Cash Gifts Pro-Bono Services     

29 Common Pitfalls in Donations of Pro- Bono Services Corporate employees can and will learn from the nonprofits they serve. Companies should tap into what they learn. Viewing Services as a One-Way Street In many cases, corporate employees need training to help them bridge the differences between the for-profit and non-profit worlds Lack of Training for Corporate Employees Both parties should articulate exactly what is needed and what will be provided Unclear Project Scope Lack of Buy-In from Management With support and encouragement from managers, employees will know the program is important to the company

30 Checklist: Determining the Best Organizations to Receive Your Pro-Bono Services  Does the organization’s need fit with what your employees or company has to offer?  Does the organization have the time to work with and manage the employees who will be providing the service?  Has the organization utilized pro bono / outside help in the past and, if so, did they have a positive experience?  Will there be senior staff from the nonprofit involved in the project?  Is the nonprofit’s board aware of and in favor of this work being done by outside help?  What will the organization do once your pro bono consultation term has ended? Is this work sustainable in some other way?  Who at the organization will be the contact person for this project?  How long will it take to complete?  How will we know when the project has been completed successfully?

Section 4 Valuing In-Kind Giving

32 Valuing In-Kind Donations Product and equipment donations are covered by IRS code 170(e)(3). Pro-bono services are not tax deductible. It is up to the donor to set the value of the products donated, not the nonprofit recipient. The recipient, however, must provide the donor with a receipt stating what exactly was received and what they intend to use it for. The IRS limits a company’s tax deduction for donated good to 10% of its taxable income.

33 Valuing In-Kind Donations Corporations must value the donated items using a formula that takes into account both the Fair Market Value (FMV) of the item – what the selling or retail price would be – and the Cost Basis of the item – the cost to the company of producing the item. The IRS allows a company to deduct up to half the gain (mark-up) on an item, but not more than twice what the company paid to make it or buy it. An Example If the cost of product is $200 and the fair market value is $500, the difference between cost and FMV, or the “mark-up” on the product is $300. Half of the mark up is $150. The deduction would be $200+$150=$350.

Section 5 Getting Started: Building Your In-Kind Contributions Program

35 Checklist for Starting In Kind Giving  Get clarity about the business benefits you hope to achieve with your program.  Are you most interested in keeping products out of landfills or focusing your employees on important causes?  Solidify senior leadership buy in.  Who needs to get on board to make this happen?  Talk to your nonprofit community to understand their needs.  What kind of products or services do they need? How often do they need them? How will it help them achieve their goals?  Review the best practices in this presentation.  Think “outside the box” about what your company can provide in in-kind donations to the community.

36 Exercise: My Next Steps Write down your next steps for building or considering an in- kind donations program at your company. 1. __________________________________________ 2. __________________________________________ 3. __________________________________________ 4. __________________________________________ 5. __________________________________________ 6. __________________________________________

Section 6 Additional Resources

38 Resources The Taproot Foundation - The Pro Bono Action Tank - Points of Light Institute - Foundation Center - Committee to Encourage Corporate Citizenship Gifts in Kind - Share Technology - Donors Forum - Aid Thoughts -