UK Gifts in Kind Policy - Company Charity Product Donations

Charitable gifts in kind is a very good way for companies to donate to charities.  This guide explains how this works and how to get the most from charitable donations of products and services from UK companies.  You can use our free Help Finder directory to source company gifts-in-kind, as well as financial donations.  Use its search categories for in-kind gifts - Consultancy & Mentoring, Donated Products & Equipment, Food, Laptops & Hardware, HR & Legal, & Compliance, Raffle & Auction Prizes and Software & IT Support.  Everything on our platform is free

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What are Gift in Kind Donations from Companies?

Gifts in kind are non-cash company donations to charity of goods, services, or expertise provided to a charity free of charge or at a discounted rate. These can include items like office supplies, professional services, or donated products that support the charity's mission.

Benefits of Company Donations of Gifts in Kind

• Cost Savings: Reduces the need for cash expenditure on essential items and services.
• More or Wider Resources Available: Expands the range of resources available to the charity.
• Community Engagement: Encourages companies to contribute in ways other than monetary donations.
• Sustainability: Promotes sustainable practices by reusing and repurposing goods.

What are the Different Ways That Companies Can Donate Gifts in Kind?

Companies can donate gifts in kind in several ways.

• Surplus Inventory. They can provide surplus inventory, such as end-of-line products or unsold stock.
• Equipment Disposal. Companies can also donate equipment they no longer need, like computers, office furniture, and tools that are still in good working condition.
• Pro Bono Services. Another method is offering professional services pro bono (at no cost), such as legal advice, IT support, or marketing expertise.

What Are the Benefits to Companies in Donating Gifts in Kind?

Donating gifts in kind offers numerous benefits to companies.

• It’s a cost-effective way to support charities and enhances the company's corporate social responsibility profile.
• Such donations can also lead to tax relief, as they may qualify for deductions under UK tax laws, making it financially advantageous.
• Additionally, donating surplus goods helps reduce waste and promotes sustainability.
• It can also improve employee morale and engagement, as employees appreciate working for a company that gives back to the community.

What Gifts in Kind Should We Not Accept?

There are some circumstances in which we would not be able to accept a Gift In Kind donation from a company.

• Charitable Objectives. Items that would be in conflict with out charitable objectives, such that the harm caused by accepting the gift would be greater than the benefit doing so would bring.
• Value.  Gifts in kind where the cost of realising its value would exceed the benefit it would bring.
• Limiting Operations. Items that come with conditions that could limit our operations or mission.
• Capacity & Expertise.  Items we do not have the capacity or expertise to be able to use safely, such as repairing equipment or handling materials that pose safety risks or are environmentally harmful.

How Do We Manage Gifts in Kind?

• Due Diligence: We carry out appropriate due diligence companies to ensure there are no reasons that might reasonably prevent us in working with them.
• Acceptance Criteria: We only accept gifts that align with our charity's mission and needs.
• Documentation: We maintain detailed records of all gifts in kind.
  • You might include descriptions,  disposal (sale or use), donor information and any donor-imposed restrictions, valuation and the valuation technique used.
• Valuation: We assess the fair market value of donated goods and services.
• Accounting: We ensure gifts in kind are properly accounted for in our financial records.
• Acknowledgment: We provide timely and appropriate acknowledgment to donors.
• Ethical Guidelines: We ensure all gifts are free from conflicts of interest and comply with ethical fundraising practices.

How Do We Account for Gifts in Kind

Charity SORP. According to the Charities Statement of Recommended Practice (SORP), fair value in accounting for donated gifts in kind is the estimated market value of the donated goods at the time they are received by the charity. This value should reflect what the charity would have paid if it had purchased the goods itself.  The SORP guidelines, state that charities should recognise the income from donated goods at fair value when the goods are received, unless it is impractical to estimate the value reliably or the cost of obtaining the information outweighs the benefits. In such cases, the income should be recognised when the goods are sold.  (Source ICAEW, Accounting for Doated Goods, 2015).

Procedures.  We follow the procedures below in ensuring that company donations of gifts in kind are properly accounted for.

• Recognition: We recognise the income from gifts in kind at their fair value in the Statement of Financial Activities (SoFA).
• Valuation: We use the estimated market value of the donated goods or services.
• Disclosure: We clearly disclose the nature and value of gifts in kind in the charity's financial statements.
• Compliance: We follow the Charities Statement of Recommended Practice (SORP) guidelines for accurate and transparent reporting.

Where of significant value, gifts in kind should be entered into your asset register (if you have one) and added to your insurance. If specific instructions on the use of or disposal of an asset are required by the donor, these should be complied with.

Accounting Threshold for Gifts in Kind

I couldn't find anything specific on this, in the SORP or elsewhere, and neither could my AI, so I've written this based on my personal experience.  I would consider the materiality of the donation.  That is, if including it have a significant impact on your accounts to the extent it might reasonably influence the decisions of those using these, I'd account for it.  Here are factors, to consider in doing so.

• The size of the donation compared to your charity's total income or expenditure.
• The nature of the donation: Some donations, even if they are small in value, might be material due to their nature. For example, a rare or highly valuable item might be considered material regardless of its monetary value.
• The impact on financial statements: Consider whether the donation would affect the overall financial position or performance of the charity. If it would, it is likely material.
• Review previous practices: Look at how similar donations have been treated in the past.

Disposal of Gifts in Kind

We dispose of a gift in kind, either by using it in our activities, or by selling it, to maximise the value of the gift to our charity, taking into account any donor imposed restrictions.

Charitable Gifts in Kind Regulatory Guidance

HMRC – Company Tax Relief on Equipment and Stock.

Gov.UK - The Charities Statement of Recommended Practice (SORP).

Charitable Gifts in Kind Resources

ICAEW - Accounting for donated goods.

CIPFA - Materiality and the Charities SORP (2021).

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This Article on Company Gifts in Kind Donations Is Not Professional Advice

This article on gifts in kind company donations is for general interest only and does not constitute professional legal or financial advice.  I'm neither a lawyer, nor an accountant, so not able to provide this, and I cannot write guidance that covers every charity or eventuality.  I have included links to relevant regulatory guidance, which you must check to ensure that whatever you create reflects correctly your charity’s needs and your obligations.  In using this resource, you accept that I have no responsibility whatsoever from any harm, loss or other detriment that may arise from your use of my work.  If you need professional advice, you must seek this from someone else. To do so, register, then login and use the Help Finder directory to find pro bono support. Everything is free.

Ethics note: AI was partially used in researching this guide.