Nonprofit Information

Gary Smith

Getting Products You Need for Free: How Gifts-in-Kind Organizations Make It Easy to Connect With Donors

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In Kind Donations for NonprofitsWhen nonprofits think about what they need to keep their organizations running, they often think of fundraising campaigns. But what if they could get the items they need donated just by flipping through a catalog?

It sounds too easy, but that’s the idea behind gifts-in-kind organizations. These organizations act as a go-between between companies with excess inventory and nonprofits in need. Groups like social service organizations, schools and churches can all benefit from donations that range from office equipment and supplies to toys and clothing.

How does it work? A qualified nonprofit pays a small annual fee to join a gifts-in-kind organization. Once the nonprofit becomes a member, it can request any of the donated items the gifts-in-kind organization has in stock at any time throughout the year. The nonprofit may make selections by browsing through the organization’s catalog of donated items or scrolling through an online list of inventory. Once the nonprofit places its order for the items it wants, the nonprofit then pays only for handling and processing fees incurred to ship the items.

Who can join? You must be affiliated with a 501(c)(3) nonprofit organization, school or church to join a gifts-in-kind organization. This may include charities, community organizations, government institutions and health facilities, among others.

What are the limitations? A member can request as many items as they want throughout the year. The only requirement is that they act in accordance with IRC section 170(e)(3). According to those guidelines, merchandise must go to care for the ill, needy or minors. It can be given directly to such qualified individuals served by an organization or used in the administration of the organization. The emphasis is on direct use—the items cannot be bartered, traded or sold.

How much can I save? It depends on how many and what types of items you request. Members of NAEIR, a leading gifts-in-kind organization, have reported a wide range of savings. On the high end, one church reported receiving $2 million in donated merchandise in one year. (Those items mostly went to children overseas through the church’s ministry.) On a smaller scale, a school that hosted a family arts and crafts event received enough paintbrushes, ornament shapes, tablecloths, stickers and pipe cleaners for all 341 participating students. On average, NAEIR members receive about $18,000 worth of merchandise a year. To boost their savings even more, some members opt to drive to the NAEIR warehouse in Illinois to pick up and transport items on their own.

What types of items are available? Gifts-in-kind organizations may have printers, pens, art supplies, toys, clothing, tools, health and beauty products, cleaning supplies and more. While available stock will vary throughout the year, nonprofits will find a wide variety of items on hand.

What types of companies donate? Both large corporations and small business donate to gifts-in-kind organizations. There are no restrictions on the size of donations so even mom-and-pop stores can make donations. Items may come from large companies like Hallmark, Microsoft, Stanley Tools, 3M Rubbermaid, Reebok, Gillette, Xerox and SC Johnson as well as small businesses, like a family-owned comic book store.

Why do companies donate? There are all kinds of reasons they donate. A few include to promote good will, to make room in their warehouses for new stock, to keep their products out of landfills and to take advantage of tax deductions that are often more advantageous than liquidating or discounting unsold merchandise. Since companies pay only to ship their goods to a gifts-in-kind warehouse, donating to a gifts-in-kind organization can be more cost-efficient than designating employees to spend time seeking out prospective charities for their donations.

How can it work for you? Think about the larger items your nonprofit wants to replace or items that you need on an ongoing or monthly basis. Replacing any of those items with donations from a gifts-in-kind organization could save you money—and help you keep perfectly good merchandise from clogging up landfills. The one downside is that you won’t only have your pick of brands. You’ll have to choose among donated items. But just choosing a few items from a gifts-in-kind organization, or using it to provide supplies for one event, could save you money as well as time. And if you add in the manpower hours you would need to collect a similar array of donated items—or the cash to pay for them—the savings grows. In an environment where cost-cutting is key, a gifts-in-kind membership is definitely worth considering.

Want to Increase Repeat Donors? Just Follow the Rules

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Fundraising Donor RetentionIt takes a lot of effort to bring in new donors. That’s why hanging on to the donors you have—and getting them to donate again and again—is key for any nonprofit.

So how you do you increase your pool of repeat donors? Here are a few rules to get you there.

Rule 1: Remember, your nonprofit is only as good as your last interaction.

The interaction a donor will remember most is the last one they had with your organization, so offer the best service possible at all times to all of your donors. Make sure you keep the donation process easy and streamlined. Acknowledge donations in a timely fashion and don’t keep donors waiting for promised tax documentation.

Rule 2: Let donors “get their feet wet.”

Small donations can lead to larger ones down the line. Are you looking for products or supplies? Offer a “trial donation” where the donor only commits to a small amount. If that goes well, you can contact them to see if they would like to make a larger donation.

Rule 3: Spread good will.

Give donors the chance to piggyback on your public relations efforts. Sure, you may publicize their name in your lists of donors, but consider going one step further. Ask if they would like to talk about their donations in your press releases or promotional materials.

Rule 4: Ask for feedback and follow through.

It’s a good idea to send out surveys to your clients to ask about how the donation process went for them. Keep it short to increase your chance of receiving a response, and consider 10 percent a good return rate. Make sure you designate someone to go through the surveys and notify staff of any problems they need to address.

Rule 5: Honor your donors’ preferred form of communication.

To develop positive relationships with donors, nothing beats in-person meetings with telephone conversations the next best. But taking those steps can backfire if a donor prefers you contact them only by email. Find out how your donors prefer you contact them, and then honor that request. If you’re receiving product donations, set up a schedule for how frequently you should contact a business. Some companies may want to donate on a quarterly basis, others every six months. It’s best to set those parameters up front.

Rule 6: Remember to ask the next question.

If you call and a company says they have nothing to donate at that time, ask if you can call back in six months. A lot of companies have “gatekeepers,” so if you call in six months and tell the person answering the phone, “Joe asked me to call him back,” your call is more likely to go through. And if you’re lucky enough to schedule an in-person meeting with a potential donor, remember the next question you should ask is whether anyone else would like to join you for the meeting. The more people you know within a company, the stronger relationship you’ll be able to build and the better chance you’ll have that that relationship will continue if your main contact leaves the company.

Rule 7: Add value to those donations.

Give your donors value beyond the tax benefits they receive. Offer specifics on where their donations went and how your organization used them. Give them as much personal connection as you can to the good their donation is doing. Taking the time to do that is the best way to turn that one-time donor into a long-term giver.

How Nonprofits Can Score New, Donated Merchandise

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NAEIR Arranges Gifts in Kind Donations for Nonprofits

In Kind Donations NonprofitsImagine what your nonprofit could do with, say, $18,000 in brand new donated merchandise this year. Furthermore, imagine you could select just what you need from thousands of first quality items—year after year—to help your organization achieve its goals.

It’s very doable, if you know the right resource.

Gifts in kind organizations are one of the great secrets of the nonprofit world. If you haven’t heard of them, you owe it to yourself to learn more about them—specifically, America’s largest, oldest gifts in kind organization, NAEIR.

How Gifts in Kind Organizations Work

NAEIR, the National Association for the Exchange of Industrial Resources, collects inventory from companies that donate to nonprofit organizations, then redistributes that inventory to its nonprofit members upon request.

Every year, NAEIR gives away more than $100 million in spanking new merchandise. NAEIR’s free stuff for nonprofits include office supplies, arts and craft supplies, educational products, books, media, toys, party goods, cleaning supplies, sporting goods, software, and much more.

That $18,000 we mentioned earlier? That’s the average value of free items received by NAEIR’s top-level members every year. Some members have actually received up to $40,000 in free resources in just one year.  The more you request, the more you benefit.

NAEIR has partnered with more than 8,000 donor companies to date, including leading brands like Microsoft, Stanley Tools, 3M, Rubbermaid, Rand McNally, Reebok, Gillette, Xerox, SC Johnson, and more. In return for their IRS charitable contributions of gifts in kind, these corporations receive significant tax deductions. In addition, it’s an easy way for them to clear overstocked merchandise out of their warehouses, while meeting their community-giving goals.

Is Your Group Eligible to Join NAEIR?

To qualify for a NAEIR membership, you must be affiliated with a 501(c) (3) nonprofit organization, school or church. Members include charities, community organizations, government institutions, health facilities and more.

The first step is to complete an online application at NAEIR.org. Nonprofits pay a modest annual membership fee—ranging from $59-$595, depending on your chosen membership level—plus nominal shipping and/or handling fees for the merchandise they request.

(By the way, the membership fee is waived for individual educators, who can augment their classroom supply budget with useful free stuff for teachers.)

Rules for Using in Kind Donations for Nonprofits

Members can view available supplies any time on NAEIR’s website and request what they need online. Premier Members also receive printed catalogs of merchandise throughout the year.

The rules of how you may use donated stock are very straightforward. According to Internal Revenue Code section 170(e) (3), donated merchandise must be used for the care of the ill, needy or minors. It can’t be bartered, traded or sold, and must be given directly to qualifying individuals served by an organization or used in the organization’s administration.

At the end of the day, belonging to a gifts-in-kind organization costs members a fraction of what it would cost to purchase the same supplies in stores or online.

1 Million Pencils: How One Nonprofit Used Gifts-in-Kind Donations

The Teacher’s Desk, a nonprofit in Buffalo, New York, exists to provide free books and school supplies to classrooms in impoverished schools. It was founded by John Mika, a retired autoworker turned teacher.

On the first day of school, Mika was disturbed to find that only three of his students actually had pencils. So in addition to other gathering general school supplies, he launched an initiative, the Pencil Project. His goal: to donate one million pencils to students in need.

Did he achieve his goal? Yes, with help from generous local corporations—and also from NAEIR, which provided thousands upon thousands of pencils.

Maybe you don’t need pencils. But maybe you do need office supplies for your administrative office or clothing and housewares for your clientele. Or something else entirely. Whatever that is, you’ll undoubtedly find goods you can use at NAEIR. And it’s yours for the asking.

 

9 Steps to Retaining Donors

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retaining donors - fundraising helpGetting a donation is one thing, but keeping those donors coming back is something else entirely. Here’s what you can do to turn those one-time donors into long-term benefactors:

  1. Keep Service Strong

When you’re dealing with products, making sure the donation process goes smoothly helps encourage companies to continue to donate. Did you make it easy for the donor to ship their products to you, did you accept and account for those products in a timely fashion, did you promptly send out promised tax letters recognizing the donation? All those questions have to have positive responses—not just for the first donation, but for every donation. In the donor’s eyes, you’re only as good as their last interaction with you.

  1. Offer Trial Donations

For potential donors, giving them the opportunity to get their feet wet can be all that’s needed to reel them in. If they have two truckloads of products to donate, but are unsure if they want to commit the entire inventory to an unfamiliar group, suggesting a “trial donation” can help. Have them donate a small quantity, maybe just a pallet full of their products. If that donation goes smoothly, follow up to see if they’re now comfortable making a larger donation.

  1. Get Customer Feedback

To stay on top of how your nonprofit is doing, consider sending out surveys to clients asking about how the entire process went for them. Make sure the survey is complete, yet not too lengthy. The longer the survey, the less likely you’ll be to get a response. Even so, don’t expect huge returns. Ten percent or so is probably typical. Make sure someone regularly reviews the surveys and addresses systemic problems or issues specific to certain donors. You can also use the surveys as a bit of good will. Ask your donors if they want to piggy back on your public relations efforts, offering them the chance to tout their own donations in your press releases and other promotional materials.

  1. Make Communication Count

Once a company has made a donation, it’s important to keep the lines of communication open. That means honoring how and how often a company wants to be contacted. Some companies want to communicate strictly by email.  But if you have a choice, phone contact is the better option, with occasional in-person meetings to really help develop positive relationships.

  1. Call Just Enough

When soliciting donations, you have to walk a fine line between keeping your organization in a company’s thoughts and becoming a pest. So how often do you call? It’s best to set up those parameters up front. When you’re first looking for product donations, ask how often companies take inventory or look to move excess product out of their warehouses. Is it on a quarterly basis, every six months? Find out, and time calls around then, when they are more likely to have items to donate.

  1. Get Past the Gatekeepers

If you make a call and a company has nothing to donate, then ask if you can call back in six months or some other set amount of time. If they say yes, then you already have a foot partway in the door. This is especially valuable with companies that have “gatekeepers.” When you are able to tell the gatekeeper that, “Joe asked me to call back,” you’re more likely to have your call go through.

  1. Build Relationships

Keeping in touch by phone and building a personal relationship with someone can help you increase your network of donors. Maybe that person will put another department that isn’t under their purview in touch with you when they notice that department has excess product. Or maybe they’ll let you know when they’re moving to another company or being transferred, so you can keep your contact list up to date.

  1. Meet Face-to-Face

In-person visits are invaluable. If you can, it’s best to avoid limiting yourself to meeting with just one person. When you’re setting up a visit, ask if there is anyone else in the company who might like to join you. That way, a meeting with one person can turn into a meeting with four or five. That not only leaves the door open to more donations, but it keeps you from having to start from square one if the one person you were dealing with leaves the company.

  1. Give Your Donors Value

Don’t assume that what a company values most is the tax benefits it receives. Many companies want to know where their donation went and how it was used. If you can provide that information, do so. It could be the best step you take to turning one-time donors into repeat donors.

 

 

 

Donating to Your Bottom Line: Giving Excess Inventory to Charity Helps Others & Makes Business Sense

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Being charitable and being profitable do not have to be mutually exclusive. That’s what companies are finding by turning their excess inventory into donations that benefit charitable groups in their communities and beyond.

charity liquidation - donations made to qualified charities are tax deductibleFor wholesalers, retailers and distributors, finding the best way to move unprofitable stock remains a challenge. They can discount or liquidate products, but that eats into profits and devalues their brand. What many savvy companies are doing instead is turning to product philanthropy—donating unwanted stock to charity. The move gets unwanted inventory off the shelves while also earning the company a healthy tax deduction.

Companies that use a gifts-in-kind organization, a nonprofit that acts as a go-between for corporate product donations and nonprofits, can streamline the whole donation process. With a gifts-in-kind group, employees don’t have to spend time screening charities to find the right fit. The gifts-in-kind group does that for them.

Using a Gifts-in-Kind Group

This is how it works. A corporation contacts a gifts-in-kind organization about donating products. Usually the company will start by completing some initial paperwork. After that corporation becomes a recognized donor, it can contact the gifts-in-kind organization whenever it wants to dispose of excess inventory. Once the gifts-in-kind group approves the donation, the company ships it to a designated location where workers will sort and catalog it. In turn, when member charities need items, they browse through a catalog of products donated by member companies and choose what they want.

The donor company will receive proper tax documentation when they make their initial donation. Once those products have been distributed, the gifts-in-kind organization will send additional documentation identifying the specific charities that received the company’s products.

Surprisingly Big Benefits

It’s no surprise that donations made to qualified charities are tax deductible. What business people may find surprising is that if their company is a C Corp, they can receive a federal tax deduction equal to up to twice the cost of the donated products. According to IRC Section 170(e)(3):

Deductions are equal to the cost of the inventory donated, plus half the difference between the cost and fair market-selling price, not to exceed twice the cost.

For example, if your product costs $10 and you sell it for $30, the difference is $20. Half of $20 is $10. So:

$10 (Product Cost) + $10 (Half the Difference) = $20 Deduction

($20 does not exceed twice the product cost, so it is does not exceed the maximum allowable deduction.)

Compare this to moving inventory via online auctions or liquidation agents and, for most companies, it’s a much better deal. Plus, it’s a lot less stressful and labor-intensive.

Beyond the Bottom Line

Besides helping companies boost their bottom lines through time and tax savings, product philanthropy can help boost a company’s image as well.

Donating products creates good will, thereby elevating a company’s image. By contrast, selling products at a discount devalues a company’s product and its brand.

Gifts-in-kind organizations also help companies to be better citizens. Even the most motivated companies might have trouble carving out the time to promote good will and give back to their communities while still keeping their businesses afloat. Gifts-in-kind organizations make that process easier. They distribute products to qualified charities, who in turn distribute them to people in need.

Finally, donating products helps make employees feel good about their workplace. Employees like working for companies that have heart. Seeing that their company is reaching out to help those in need is a great way to express that.

How to Get Started

There are several gifts-in-kind organizations operating in the U.S., and, like anything, not all are created equal. Companies will want to choose one that is easy to work with and has a roster of worthy charities.

charity liquidation When choosing a gifts-in-kind organization, companies should ask these questions:

  • What types of charities do you serve?
  • What types of products do you accept? Does my company’s products fit with what your member charities want?
  • Are there limits on what size donations (large or small) that you accept?
  • Is the donation process fast and streamlined?
  • Will you provide me with detailed records of what I donated and what charities received it?
  • Are there any fees involved? (Businesses will want to choose a gifts-in-kind group that does not charge fees to corporate donors.)

When to Start

There is no “right” time to start using a gifts-in-kind group. But the sooner a business starts using one, the sooner it will reap the benefits.

Donating excess inventory will do more than just help trim a company’s tax bill, it also will help it operate more profitably. Getting rid of excess inventory, instead of letting it collect dust in a warehouse, will free up space for high-performing products.  And it may even speed up order fulfillment, in turn, raising customer satisfaction. Finally, instead of leaving products to languish in warehouses or on store shelves, companies will put them into the hands of people who really need them. It’s a great—and easy—way to make a difference in people’s lives.

 

Gifts In Kind Organizations Can Benefit Nonprofits With Free Merchandise

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Nonprofit FundraisingNonprofits play crucial roles in their communities. Whether they are schools, churches, health organizations, government agencies or a myriad of others, nonprofits offer services to help people in need or crisis and support families in a variety of ways. However, most nonprofits just don’t have enough resources to provide support to every vulnerable member of their communities.

That’s why gifts-in-kind organizations are so valuable. After paying a small membership fee, they enable nonprofits to obtain free items that can support their charitable activities.

A gifts in kind program solicits donations of new merchandise from American corporations and redistributes that merchandise to nonprofits at no cost other than a small yearly membership fee and the cost of shipping/handling the items they select. Participants can include schools, social service agencies, housing authorities, police and fire departments and churches.

In cases where a struggling family is in need of an intervention, a gifts in kind organization can provide crucial items like blankets, toiletries, and household supplies. Furthermore, it’s an affordable resource nonprofits can use for various activities and maintenance.

Recently, a church received beautiful windows through the efforts of the program. This renovation would have been an expensive undertaking, but because they were members, the church was able to dedicate the funds that might have been spent on this costly purchase to supplement its own mission programs.

In today’s economy, many families are experiencing desperate circumstances and must turn to nonprofits for assistance. This means the call for household goods and supplies is great. Thankfully, membership in a gifts-in-kind organization allows nonprofits to obtain top notch merchandise for free. Members can browse a huge catalog of donated merchandise and request what they want or need.

Companies like Microsoft, Stanley Tools, 3M, Rubbermaid, Rand McNally, Reebok, Gillette, Xerox, Hallmark and thousands of others make such contributions, supporting charitable causes while at the same time taking advantage of tax deductions, reducing storage costs, clearing warehouse space and avoiding hassles with liquidators. Items donated include office supplies, class materials, clothing and shoes, maintenance items, tools and hardware, toys and games, computer software, sporting goods, books, tapes, CDs, arts and crafts, personal care items, holiday and party items, janitorial supplies and more.

Nonprofit groups usually pay a small fee to join and nominal shipping and handling charges to participate in the program, but the merchandise itself is free. The gifts-in-kind organization handles sorting, processing, cataloging and redistribution of the merchandise.

Organizations that participate are required to use the merchandise in accordance with IRC section 170(e) (3). This states that the merchandise must be used for the care of the ill, needy or minors and cannot be bartered, traded or sold. The merchandise can be given directly to the qualifying individuals served by an organization or used in the administration of the organization.

For more information, non profits can call 1-800-562-0955 or visit NAEIR’s website at www.naeir.org. 

 

 

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