If your nonprofit receives a donation of services, you have received a gift in kind. Also known as an in-kind donation, this charitable contribution is not money to buy a product or service. Instead, a person agrees to do something or buy something on behalf of your nonprofit. If an accountant agrees to compile your financial statements at the end of the year for free, you have received a gift in kind. When you receive a gift in kind, you are still responsible for recognizing that donation in your financial records. You must state that a donation was received; the dollar amount of the gift in kind is equal to the market price of the service received. If the accountant above would normally charge $100 per hour, and it would take eight hours to compile your records, the gift in kind is equal to $800. An in-kind donation of a couch would be valued at its fair market value. It is important to let your donors know that if they make an in-kind donation, only the out-of-pocket expense portion of their donation is tax deductible. For this reason, most individuals who want to support your business will give cash payments. It is more beneficial to receive in-kind donations than cash for some nonprofit organizations. Emergency or disaster relief nonprofits have less use for cash and more use for specific items that can be used. In-kind donations are sometimes considered a green business practice because a secondhand good that would otherwise be thrown away can be donated and salvaged. In the end, a gift in kind is a donation that someone has made to support your cause. Although there are a few different rules when handling these donations, you want to appreciate the fact that someone is helping your nonprofit.