In many NGOs, a significant share of the resources mobilized never appears on a bank statement: premises made available by a town hall, medicines donated by a laboratory, hours of pro bono consulting, vehicles lent by a local partner, foodstuffs given by a manufacturer. These in-kind contributions are essential to running operations, but they pose a recurring headache for finance departments and program coordinators: how do you identify them, value them without overstatement, record them in compliance with the nonprofit chart of accounts, and above all justify them to donors who increasingly require their traceability?
This article reviews what NGO in-kind contributions cover, their accounting treatment, recognized valuation methods, the expectations of the main donors, and the recurring pitfalls during audits. We then propose a structured five-step approach to make your system reliable, and we explain how a platform such as Abvius makes it possible to track these non-monetary resources with the same rigor as your financial flows, from the field all the way to donor reporting.
NGO in-kind contributions: value, record and audit with confidence
Reading time: ~12 min
Contents
- What do in-kind contributions cover?
- The applicable accounting and regulatory framework
- Valuation methods: recognized practice
- Donor reporting and non-monetary co-financing
- Audit pitfalls and risks to anticipate
- 5 steps to structure your system
- Abvius: tracking and auditing in-kind contributions
- Mini FAQ: NGO in-kind contributions
What do in-kind contributions cover?
NGO in-kind contributions, also referred to as voluntary in-kind contributions or gifts in kind (GIK) in English terminology, designate all non-monetary resources provided free of charge to an organization for the fulfillment of its mission. They do not pass through bank accounts, yet they have a real economic value that contributes directly to program outcomes.
The three main categories
French accounting doctrine traditionally distinguishes three main categories of voluntary contributions:
- Volunteering: hours of work offered by individuals (board members, field volunteers, occasional helpers) who receive neither salary nor allowance for this activity.
- In-kind services: services rendered free of charge by third parties, such as the free provision of premises, vehicles, IT equipment, or intellectual services offered by a law firm, a graphic designer or a carrier.
- In-kind donations: goods transferred free of charge to the NGO, whether foodstuffs, medicines, clothing, medical equipment, IT hardware or school supplies.
Why it really matters
Ignoring or underestimating in-kind contributions amounts to presenting a truncated picture of the organization's actual activity. For a health program that relies 40% on medicines donated by a pharmaceutical laboratory, failing to value these contributions hides both the true scale of operations and the organization's dependence on this type of resource. Conversely, valuing them properly makes it possible to demonstrate the effective mobilization of partners, to attest to a leverage effect on donor funds and, in some cases, to mobilize a recognized non-monetary counterpart (matching in-kind) acknowledged by the donor.
The applicable accounting and regulatory framework
In France, the ANC 2018-06 regulation on the annual accounts of private-law nonprofit legal entities clarified the treatment of NGO in-kind contributions. For financial years beginning on or after 1 January 2020, these resources must be recorded in the accounts when they meet two cumulative conditions: they constitute an element essential to understanding the activity, and the organization is able to identify and value them reliably.
Which accounts should you use?
The nonprofit chart of accounts provides two dedicated sets of accounts, operating as mirror images:
- Class 86: uses of voluntary in-kind contributions (account 860 for in-kind relief, 861 for the free provision of goods, 862 for services, 864 for volunteer staff).
- Class 87: voluntary in-kind contributions received (account 870 for volunteering, 871 for in-kind services, 875 for in-kind donations).
The total of class 87 is always equal to the total of class 86. These accounts appear at the foot of the income statement, in an "off-balance-sheet" presentation that alters neither the accounting result nor taxation, but that makes the scale of the contributions mobilized visible.
The notes: an essential step
The notes to the annual accounts must describe the methods used to identify, quantify and value in-kind contributions. This methodological transparency is required by statutory auditors and scrutinized by donors during audits. Vague notes ("valuation at market price") are no longer enough: you must detail the source of the prices, the calculation bases, the excluded scopes and the controls performed.
Valuation methods: recognized practice
Valuation is the most sensitive point. A poorly assessed NGO in-kind contribution — most often overstated — undermines the entire accounting structure and exposes the organization to adjustments during a donor audit. The general rule is simple: value at fair value, that is, at the cost the organization would have incurred to acquire or rent the good or service under normal market conditions, as at the date of the contribution.
Good references by type of contribution
| Type of contribution | Recommended valuation basis | Supporting documents to keep |
|---|---|---|
| Provision of premises | Local market rental value (m² × average price) | Provision agreement, rental comparables |
| Volunteering | Loaded minimum wage for unskilled tasks, comparable daily rate for expertise | Timesheets, job description, volunteer attestation |
| Pro bono services | Pro forma invoice from the provider at the standard rate | Dated and signed pro forma, deliverables produced |
| Donations of goods (medicines, foodstuffs) | Local market value of the equivalent new good | Donation slip, donor certificate, best-before date |
| Loan of vehicles / equipment | Equivalent rental rate over the period | Loan agreement, comparable rental quote |
| Free transport | Market freight rate per tonne / km | Waybill, comparable quote declined |
The principle of prudence above all
When there is doubt about value, it is better to underestimate than to overstate. The doctrine is consistent: where it cannot value a contribution reliably, the organization refrains from recording it but may mention it in the notes for information. This prudent approach is unanimously welcomed by statutory auditors and donor auditors, who prefer the absence of an entry to a questionable one.
Donor reporting and non-monetary co-financing
More and more donors recognize in-kind contributions as an eligible share of the NGO's own contribution to a project budget, what is sometimes called matching in-kind. This recognition is never automatic: it depends on precise rules that vary from one donor to another.
The requirements of the main donors
| Donor | Acceptance of in-kind contributions as co-financing | Main conditions |
|---|---|---|
| European Commission (DG INTPA, ECHO) | Yes, under strict conditions | Mentioned in the contract, justified valuation, cannot cover more than a certain percentage of the co-financing |
| AFD | Yes, capped | Cap generally set in the agreement, documented valuation methodology |
| Crisis Centre (CDCS) | Partially | Volunteering rarely eligible, goods and services possible with supporting documents |
| USAID | Yes (cost share in-kind) | Rigorous documentation required, audit trail traceability, 2 CFR 200 compliance |
| UN agencies (OCHA, UNHCR) | Limited | Often excluded from direct funding, but recognized in the narrative report |
To be able to mobilize an in-kind contribution as co-financing, three conditions are almost universal: the contribution must be mentioned in the approved provisional budget, its valuation methodology must be described in the agreement, and each line must be backed by auditable supporting documents. Without this, the contribution will be recognized in the annual accounts but cannot be charged to the donor project.
Audit pitfalls and risks to anticipate
During audits, whether conducted by a statutory auditor, an external auditor mandated by the donor, or a European Union Pillar Assessment team, several errors recur systematically with in-kind contributions. Anticipating them saves precious time and avoids adjustments.
Systematic overstatement
This is pitfall number one. Valuing a lent premises at €4,000 per month when the local square metre rents for €8 is an immediate red flag. Auditors always compare with available market prices. The golden rule: keep in the permanent file the comparables (listings, quotes, price indices) used for the valuation.
Untracked volunteering
Many organizations record hundreds of hours of volunteering without a signed timesheet, without a job description, without a volunteer attestation. In an audit, these entries are systematically restated. Simply having a volunteer register, with dates, assignments and hours, radically changes the robustness of the system.
The absence of an audit trail
A recorded in-kind contribution must be traceable to a real event, a place, a program. When an auditor asks "show me the medicines corresponding to this €35,000 entry," they must be able to follow a clear audit trail: donation slip, field receipt note, distribution to beneficiaries, any remaining stock. Any break in this chain weakens the entry.
Double counting
A classic case: a vehicle rented to a partner at a preferential rate is partly valued as an in-kind contribution for the "gift" portion, then also invoiced for the real portion. Without robust internal control, the organization runs the risk of charging the same resource twice to a project. A clear scheme separating monetary flows from valued contributions is essential.
Omission in the notes
Recording in-kind contributions without describing the methodology in the notes is a recurring source of observations from statutory auditors. This section of the notes must be prepared as a genuine methodological note: scope, price sources, internal controls, main assumptions, amounts by category.
5 steps to structure your system
Setting up reliable management of in-kind contributions cannot be decreed. It is a cross-functional project that mobilizes finance, operations, logistics and communications. Here is a proven five-step approach.
Step 1: map the contributions received
Start by listing, project by project, the in-kind contributions actually received over the last twelve months: regular volunteers, donors of goods, partners lending equipment, providers of premises. This initial mapping often reveals "invisible" contributions that no one thought to record, such as travel offered by airlines or IT services from a patron.
Step 2: formalize an internal policy
Draft a short in-kind contributions policy (4 to 6 pages) that defines materiality thresholds, valuation bases by category, the supporting documents required, roles and responsibilities (who approves, who records) and internal controls. This policy must be approved by management and circulated to field teams and headquarters alike.
Step 3: equip field collection
The weak link is often the flow of information from the field. Operational teams have neither the time nor the tools to record each contribution. A platform accessible on the move, with simple forms (type of contribution, donor, value, attachments), changes the game. This is where digitalization has the most impact.
Step 4: integrate in-kind contributions into project reporting
An in-kind contribution that is recorded but absent from project reporting has no practical value. It must appear in budget dashboards, in donor financial reports (where permitted) and in internal communications. Keeping in-kind contributions alive in operational steering prevents them from becoming a purely year-end accounting exercise.
Step 5: audit your own system
Once a year, ideally ahead of the external review, organize a mini internal audit of the in-kind contributions system: sampling of entries, verification of documents, consistency checks on valuations, review of the notes. This preparation very significantly increases peace of mind during real audits and highlights areas for improvement.
Abvius: tracking and auditing in-kind contributions
Rigorous management of NGO in-kind contributions requires combining three capabilities rarely brought together in conventional tools: capturing information as close as possible to the field, enriching it with the right supporting documents, and reporting it in the correct accounting and donor framework. This is exactly what we designed at Abvius.
Headquarters-field centralization
On Abvius, field teams enter the in-kind contributions received — volunteering, donations, services, provisions — directly from a mobile interface designed for unstable connections. Each entry triggers a configurable validation workflow, with electronic signature by managers and time-stamped retention of documents. The information flows up to headquarters in real time, with no re-keying.
Real-time budget monitoring
Valued contributions are automatically integrated into the real-time budget monitoring of the relevant project: they appear alongside the planned budget lines, feed the co-financing tables and allow both the finance director and the project manager to view the overall execution rate, monetary and non-monetary combined.
A complete digital audit trail
Every movement, every document, every validation is tracked in an immutable digital audit trail. During a donor review, you can present in a few clicks the complete chain for a given entry: provision agreement, donation slip, field receipt note, distribution, recording and project allocation. The statutory auditor appreciates it, and the donor auditor saves time.
Automatic donor reporting
Donor reporting is generated directly from Abvius, with in-kind contribution entries integrated in the right formats — whether an ECHO financial table, an AFD report or a USAID cost share report. No more copy-pasting between Excel and Word, no more risk of error between the financial reporting and the accompanying methodological note.
To explore our finance, operations and MEAL modules designed for NGOs, CSOs and international solidarity organizations in more detail, visit abvius.org.
Mini FAQ: NGO in-kind contributions
Do all in-kind contributions have to be recorded?
No. The ANC 2018-06 regulation requires recording only when the contribution is significant for understanding the activity and when the organization is able to value it reliably. Occasional, marginal or hard-to-assess contributions can be mentioned in the notes without being entered in classes 86 and 87.
Should board members' volunteering be valued?
This is a sensitive point. Board members' volunteering can be valued if it exceeds the usual statutory obligations and is documented (time spent, nature of tasks). On the other hand, time spent on statutory governance meetings is generally not valued. The internal policy must clarify this point to avoid divergent interpretations.
Does an in-kind contribution entitle the donor to a tax receipt?
Yes, under conditions. An in-kind donation to an association recognized as being of general interest may give rise to a tax receipt for the donor (individual or company), provided the donated good has a justifiable economic value and the organization is able to attest to it. Volunteering by individuals, however, does not give rise to a tax receipt in France.
How should in-kind contributions received in local currencies or abroad be handled?
Valuation is performed at fair value on the local market at the time of the contribution, then converted into euros at the exchange rate used for the project's accounting. It is essential to document both the local value and the conversion rate used, as for any multi-currency operation. A clear foreign-exchange policy and a multi-currency management tool prevent unexplained exchange differences during consolidation.
Summary
Well managed, NGO in-kind contributions are a major asset: they give a faithful view of the real effort mobilized for missions, they can be recognized as co-financing by several donors, and they strengthen transparency towards donors and the public. Poorly managed, they become a source of fragile entries, audit adjustments and loss of credibility. The difference does not lie in accounting complexity, but in the rigor of the collection, valuation and traceability system built around them. It is precisely this rigor that Abvius industrializes for NGOs, from field operations to donor reporting, without adding to the teams' workload.
To go further, you can read our articles on preparing for donor audits, the digital audit trail and the NGO analytical chart of accounts. To discuss your current system and identify the priority areas for improvement, contact us via abvius.org.