Gifts-in-kind organizations help keep budgets in the black

Getting the necessary products to keep their offices running smoothly while staying within a tight budget is a constant struggle for city and county agencies. But there is a low-cost solution—gifts-in-kind organizations. By joining one of these groups aimed at product philanthropy, administrators can get the products they need while also helping companies keep their businesses greener.

Gifts-in-kind organizations take products companies want to donate and redistributes them to government agencies, schools, churches and nonprofits in need. For companies, it means they free up warehouse space and cut storage costs by donating unsold products. The process often is more attractive to companies than alternatives such as selling products for pennies on the dollar through a liquidator or dumping them in a landfill. Plus, the donations earn companies a tax break and help them put their products into the hands of more people while doing good. It’s a way for them to spread good will while protecting their brand.

City and county agencies can reap the benefits of this good will by joining a gifts-in-kind organization. Their membership in a gifts-in-kind organization helps them get the products they need for a fraction of the cost, often from companies they are already doing business with. Donations come from large corporations as well as small businesses, giving agencies a wide variety of products from which to choose. Products include just about everything, including office supplies, electronics, clothing, toiletries, tools and art supplies, to name a few.

Getting started with a gifts-in-kind organization is simple. A city or county agency will pay a small annual membership fee to belong to a gifts-in-kind organization. In return, the agency can browse the organization’s online site or look through its print catalog to find out what products are available. The agency then requests any items it wants. There are no restrictions on how much or how often the member can request items. Once a request is approved, the agency pays a small handling fee and sometimes shipping costs to have the items sent to them. In turn, the company that donated the items receives paperwork documenting its donation.

Donated items may include items that an agency may use on a daily basis — office supplies, cleaning materials and electronics, for example. The only restriction on these donations is that agencies must act in accordance with IRC section 170(e)(3), which means the donated items cannot be bartered, traded or sold. The items can be used in the administration of the organization or given directly to qualified individuals (the ill, needy or minors). That could mean that the agency uses items for its day-today operations or distributes products such as toiletries and clothing to needy families in its community.

How much can an agency save? It depends on how many and what types of items it requests. One church actively involved in donating clothing and other items to children overseas reported receiving an estimated $2 million dollars in donated items in one year. For most, the saving will be much more modest, an average of about $18,000 in donated products a year. Again, it depends on the agency and its needs. An agency requesting items like pens and paper may not save as much as one requesting bigger ticket items like printers. Still, when you’re trying to rein in costs, every penny makes a difference. And if using a gifts-in-kind organization means keeping products out of landfills, it also helps improve the environment. It’s a green solution that just might help keep an agency out of the red.

Gary C. Smith is the president and chief executive officer of the National Association for the Exchange of Industrial Resources (NAEIR), the oldest, largest gifts-in-kind organization in the U.S.