There are many definitions for in-kind costs. For this blog post, I’ll define in-kind costs as non-cash contributions from individuals or organizations to a nonprofit for a specific project.
I do not consider in-kind costs as non-cash donations. While the definition between in-kind and donations can be similar, I consider donations as supporting a nonprofit’s operations. Like donating clothing, food, or books. In-kind costs help a project become successful. Such as a washing machine and dryer, a stove, or a bookshelf. Also, in-kind costs can include volunteers and donations never.
On some grant requests, foundations ask for in-kind costs in the budget. I identify these costs in the narratives where I write about the number of hours a volunteer worked or the benefits of a donated product.
I avoid reporting in-kind costs in the budget because putting a value on non-monetary resources is subjective. As an example, what is the salary of a volunteer or should a product be priced retail or wholesale or other? While, there are cost guidelines, they are not exact.
Second, in-kind costs can mistakenly inflate a project’s budget and cause a foundation to misunderstand the need for funding. As an example, a nonprofit may receive less funding if they identify donations as in-kind costs. The former helps with operations, but does not support the long-term goals of the project where funding is needed.
Third, donations are not guaranteed while in-kind costs are obligations to the project. Donations may or may not come. In-kind costs usually do arrive.
In the budget portion of the grant request, I stay away from any costs that can be subjective. I provide only cash figures in the budget and cost areas. All other non-monetary resources I leave to the narratives.