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Handle In-Kind Acknowledgments

Goal: Send IRS-compliant acknowledgments for non-cash gifts — describing the item but not stating a dollar value — so donors have what they need for their tax filings without the affiliate overstepping IRS guidance.

Why in-kind acknowledgments are different​

Per IRS Publication 1771:

  • The donor of a non-cash gift is responsible for valuing it
  • The receiving nonprofit acknowledges the gift but does not state a dollar value
  • For gifts the donor values at $500+, they need IRS Form 8283 Part A
  • For gifts the donor values at $5,000+, they need Form 8283 Part B with a qualified appraisal
  • For vehicle donations, IRS Form 1098-C is required

If your acknowledgment letter states a dollar value, the IRS may treat that as a substantiation problem for the donor. Stick to description only.

What the acknowledgment must include​

  • Affiliate legal name, address, EIN
  • 501(c)(3) statement
  • Date the gift was received
  • Description of the item(s) — make, model, condition, quantity for goods; nature of services for in-kind services
  • A statement that no goods or services were provided in return
  • A reminder that valuation is the donor's responsibility (you can be helpful here — note that they may want to consult a qualified appraiser for items above $5,000)

Current state in Ayuna​

The in-kind donation flow tracks the gift through the four-stage lifecycle (Received → Appraised → Recorded → Disposed), but automatic acknowledgment letter generation is not yet built. This is a known gap.

In the meantime:

  1. When an in-kind donation is recorded, run a manual workflow:

    • Pull the donation details
    • Use a Communications template ("In-Kind Acknowledgment")
    • Send manually with the item description filled in

  2. Build a simple checklist so this doesn't get missed:

    • Daily or weekly review of new in-kind donations
    • Manual acknowledgment sent within a week of receipt
    • Track which have been acknowledged in the donation note

Vehicle donations specifically​

Vehicles need Form 1098-C, not a generic in-kind acknowledgment. The form must include:

  • Donor name, address, TIN
  • Vehicle description (year, make, model, VIN)
  • Date donated
  • Date sold (if sold) and gross proceeds, OR statement of significant intervening use

Ayuna captures the vehicle details in the in-kind flow; the actual 1098-C generation is currently a manual step using the captured data.

Year-end consolidated in-kind statement​

When generating year-end annual statements, in-kind gifts appear as a separate section (description only, no totals). This is in addition to (not a replacement for) the per-gift acknowledgment.

When the donor asks for a value​

This comes up often:

  • "What's my tax deduction for the cabinets I donated?"
  • "Can you put $1,500 on the receipt for the lift gate?"

Both are well-meaning but the affiliate shouldn't oblige. Your response:

  • "We're not able to state a value — IRS rules say valuation is the donor's responsibility"
  • "Items under $5,000 — most donors use the actual cost or fair-market-value of comparable items"
  • "Items $5,000+ — we strongly recommend a qualified appraisal"
  • "I'm happy to provide the description; that's what we acknowledge"

Train your team to handle these requests consistently. A clear "we can't, and here's why" is better than a vague answer.

Future enhancement​

Built-in IRS-compliant in-kind acknowledgment letter generation is on the roadmap, including:

  • Automatic letter on in-kind donation creation
  • Donor-side download
  • Form 1098-C generation for vehicles
  • Year-end batch for any donors who haven't received per-gift acknowledgments

Until those land, treat in-kind acknowledgment as a manual workflow with the in-kind donation record as your tracking system.