How to Acknowledge In-Kind Donations for Taxes

When a donor gives your nonprofit a non-cash gift worth $250 or more, the IRS requires you to send a written acknowledgment describing the item, and it has to happen before the donor files their tax return. That's the whole legal obligation in one sentence. The part that trips people up is what the letter can't say: it can't state a dollar value. That's the donor's job, not yours.

This isn't about whether the gift is tax-deductible for the donor. That's a separate question, and we've covered it in a simple guide to in-kind donation deductibility if that's what you're actually looking for. This post is about the other half: what your organization has to produce, and how to produce it well, so your donors have what they need and your files hold up.

What the IRS actually requires for non-cash gifts

The rule comes from the IRS's own guidance on charitable contributions and written acknowledgments, and it's narrower than most nonprofits assume. For any single contribution of $250 or more, cash or non-cash, the donor needs a "contemporaneous written acknowledgment" from your organization to claim the deduction. For property, the IRS is explicit that the acknowledgment must include "a description (but not value) of non-cash contribution." Not an appraisal. Not a number. A description.

If your organization gave the donor anything back in exchange, like an event ticket or a tote bag, you do need to describe that and give a good-faith estimate of what it's worth. But that estimate is about what you gave them, never about what they gave you.

"Contemporaneous" has a specific meaning too: the donor needs the letter by the earlier of when they file their return or the return's due date, including extensions. In practice, that means don't sit on it. Send the acknowledgment close to when the gift arrives, not in a batch the following March.

None of this is tax advice for your specific situation. It's general guidance based on published IRS rules, and if a donor's gift is unusual (real estate, vehicles, securities), point them toward a tax professional rather than guessing.

Why the nonprofit should never put a dollar value on the receipt

This is the single most common mistake, and it's an easy one to make with good intentions. A donor drops off a truckload of supplies and asks "what should I put down for this?" It feels helpful to just tell them a number. It also puts your organization in a position it shouldn't be in.

Valuing a non-cash gift is the donor's responsibility, because they're the one claiming the deduction and they're the one who has to defend that number if the IRS asks. If your acknowledgment letter states a value and the IRS later disagrees with it, that's now a document with your nonprofit's name on it contradicting the donor's return. Stick to describing what you received: "10 cases of canned vegetables," "a used laptop, model unspecified," "office furniture: 3 desks and 6 chairs." Specific and factual, no dollar sign anywhere.

What a proper acknowledgment letter needs to include

A compliant, useful acknowledgment covers 5 things:

• Your organization's legal name. Exactly as it appears on your IRS determination letter.
• The date of the contribution. When the item was received, not when you got around to writing the letter.
• A description of the item. Specific enough that someone reading it later knows what was donated, without any estimate of worth.
• A statement about goods or services provided in return. Either "no goods or services were provided in exchange for this contribution," or a description and good-faith value of whatever you did give back.
• A statement that the organization is a qualified 501(c)(3). This is what lets the donor treat the gift as a charitable contribution in the first place. Optional but worth adding: your EIN, a receipt or reference number, and a short line of genuine thanks. None of that is required by the IRS, but it makes the letter more useful as a record and less like a form.

Sample in-kind donation acknowledgment letter

Adapt this for your own letterhead. The bracketed fields are what changes gift to gift.

[Organization Legal Name]
[Address] | [EIN]
 
[Date]
 
Dear [Donor Name],
 
Thank you for your generous gift to [Organization Name]. We received the
following item(s) on [date of donation]:
 
  - [Description of item, e.g. "1 commercial-grade refrigerator, used
    condition" or "40 boxes of children's clothing, various sizes"]
 
No goods or services were provided by [Organization Name] in exchange for
this contribution. [Organization Name] is a tax-exempt organization under
Section 501(c)(3) of the Internal Revenue Code.
 
This letter serves as your official acknowledgment for tax purposes. Please
retain it for your records. [Organization Name] did not assign a monetary
value to this gift; per IRS guidance, that determination is the donor's
responsibility.
 
With gratitude,
 
[Name, Title]
[Organization Name]

If your organization did provide something in return, swap the middle paragraph for a description and good-faith estimate of that benefit instead.

Common mistakes nonprofits make

Putting a dollar value on the letter. Covered above, and it's still the most frequent error. If a donor pushes back and wants a number, tell them plainly that the IRS puts that determination on them, not on you, and point them to a tax preparer if they need help.

Sending nothing at all. Small in-kind gifts, especially recurring ones from the same donor, are the ones most likely to fall through the cracks. A box of supplies dropped off by a regular volunteer often gets a verbal thank-you and nothing on paper. If it's worth $250 or more, that's a compliance gap, and even under that threshold, a written acknowledgment is good practice and good donor relations.

Sending only a generic thank-you. A form letter that says "thank you for your generous donation" without describing what was actually given doesn't meet the IRS description requirement, and it's less useful to the donor besides. If your acknowledgment doesn't say what was donated, it isn't doing its job.

Treating every gift the same regardless of size. A $40 gift and a $4,000 gift have different obligations attached to them, but both deserve some kind of specific, timely response. The instinct to only bother with the big ones is understandable and it's also how organizations end up with donors who never come back.

The real operational problem: doing this consistently

None of this is hard for one donation. It gets hard at volume. A nonprofit running a supply drive, a shelter that receives repeat furniture and food donations, or a school program collecting classroom materials might be logging dozens of small in-kind gifts a month, each one needing its own description, its own date, its own letter. Do it by hand in a spreadsheet and email thread, and acknowledgments slip. Someone's on vacation, a gift gets logged without a clear item description, a thank-you goes out three months late because nobody had ownership of it.

This is where having gifts tied to a system rather than a shoebox of receipts actually matters. On Givelink, when a donor buys a specific item your nonprofit posted, that gift is already tied to that donor's name, the exact item, and the date it arrived, because the platform confirms delivery with a photo when the package lands. Swords to Plowshares used Givelink to receive donated items this way, gift by gift, each one already attached to a specific donor and a specific item rather than a pile that needs sorting out after the fact. That doesn't write your acknowledgment letter for you, but it removes the part where you're guessing what was actually donated and when.

Frequently asked questions

Does a nonprofit have to acknowledge every single in-kind gift, even small ones? The IRS only requires a written acknowledgment for a single contribution of $250 or more. Below that, there's no legal requirement, but sending a short thank-you describing the item is still good practice and keeps your donor relationships solid.

Can we estimate the value of a donated item to make it easier for the donor? No. The IRS is specific that acknowledgment letters should describe non-cash gifts but not assign them a value. Valuing the gift for tax-deduction purposes is the donor's responsibility, and if they need help, that's a conversation for their tax preparer.

What if we can't tell what a donated item is actually worth? That's fine, because your letter never needs to say. Describe the item as specifically as you can (brand, condition, quantity) and leave valuation out of it entirely. A precise description is more useful to the donor's tax preparer than a guessed number would be anyway.

Do we need to send the acknowledgment right away, or can we batch them at year end? The IRS requires the donor to have it by the earlier of when they file their return or the return's due date, so a January batch technically clears that bar. In practice, sending it close to when the gift arrives is better for the donor and far less likely to get lost on your end.

Next step

If your nonprofit is fielding in-kind gifts regularly enough that acknowledgment letters are becoming their own small project, it's worth seeing how a platform built around exactly this kind of gift works. Take a look at how Givelink works, or browse the charity directory to see how other nonprofits are already listing specific needs and receiving verified, donor-attributed gifts.