Thursday, July 10, 2014

Donations - cash or in kind?

Non-profit schools often receive donations of stuff. Sometimes they are things the donor no longer wants but sees value therein and does not want to throw away. Sometimes the donor sees a need and goes and buys something. Either way, the donor thinks s/he is doing good, but is it good for the school?

The first scenario can simply transfer the disposal problem to the school. The school wants to maintain the relationship with the donor, and so does not say "no", but does not want or need the items. They may be old, incomplete, inappropriate. They may even be irrelevant to the program. I have read of goodwill organizations which routinely dump or shred much of what they receive as it is simply unusable.

The school may have a storage issue, especially of the items are not going into immediate use or if they replace something in use but which itself is not yet ready for disposal. The school also has the issue that the donor wants to see the items in use, and will probably even ask about them on future visits.

The school also may have a quality issue. The crayons the parent bought are just not as good as the speciality crayons the school buys. The discount chairs are fragile, and when they break, do so suddenly producing sharp and dangerous edges. The tempera paint is not washable, despite the label.

Frequently, the school has a pricing issue. The $35 the parent spent on a box of copy-paper could have bought two boxes of paper from the school's supplier, or one box of paper plus a several boxes of crayons.

Donors should always first discuss potential donations with the school, and schools should be prepared to decline offers. However, as a rule-of-thumb for potential donors, remember that cash is king. Cash gives the school the freedom to put it where it sees the greatest need and avoids the pitfalls above.

btw - I am not talking about tax treatment. The donor's tax-return preparer is best equipped to deal with this question. The best thing the school can do is to issue a receipt stating the approximate cash value of the donation, and specifying that the donation was of goods and not of cash.

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