October 27, 2005 | Read Time: 3 minutes
Q. My college is in the midst of a capital campaign — we’ve raised nearly two-thirds of our $15-million goal, with 18 months left to go. Our lead donor gave a $5-million challenge grant, which has been used to match subsequent donations, and we have almost exhausted that match. We are now talking with corporations about gifts, and many are technology companies whose main form of philanthropy is in-kind donations (computers, software, etc.). Our administration would like to count these in-kind contributions toward our campaign goal, and “match” them with cash from the challenge grant. The lead donor prefers that we match cash only, but will consider matching in-kind gifts, if it means the goal will be reached. Has anyone else faced a situation like this with in-kind donations in a capital campaign, and did they count them toward a matching grant?
A. The question of whether to “count” products and services in a capital campaign has become an increasingly common one among nonprofit organizations, says Del Martin, a fund-raising consultant in Atlanta who specializes in capital campaigns. To provide an answer to your particular scenario, however, Ms. Martin would like to know why you are raising the money in the first place: “For instance, if part of the campaign goal is to pay for computers and software, then naturally a donation of computers and software would serve the same purpose as cash.” If this is the case, she says, you can make an argument to the donor for using those gifts toward the matching requirement.
However, if the goal of the campaign is to fund the construction costs for a building, or for growing an endowment, then in-kind gifts such as those you describe would not help.
“If you went ahead and matched the gifts in that case, the intent of the lead donor would be subverted, as he or she most likely wanted the gift to help encourage others to give to reach your needed goal,” she says.
Other organizations have indeed faced similar situations as yours, says Ms. Martin. In fact, she is currently working with a museum that has made the decision to count donated products — such as concrete, cables, and steel — in its capital campaign for a new building, because such items will help decrease the amount of cash needed to make the ultimate goal.
“In my experience, only those organizations who decide to count in-kind gifts that are what I call ‘project budget-relieving’ end up in a good position at the end of the campaign,” says Ms. Martin. “Organizations that decide to count in-kind gifts despite the fact that they do not meet the campaign’s specific objectives, on the other hand, often find themselves short of the cash or pledges needed to fund a project. They end up with a dissatisfied and poorly stewarded challenge donor, and they sometimes end up with in-kind gifts that they have no use for.”
The Midwest Palliative and Hospice CareCenter, in Glenview, Ill., found that soliciting donated products helped it do better in its nearly completed $17-million capital campaign than it would have otherwise, says Anne Rossiter, senior director of philanthropy at the organization.
The USG Corporation, a building-products company in Chicago, donated $21,000 worth of drywall, and Illinois Tool Works, in Glenview, donated two commercial refrigerators worth $5,000, in addition to $200,000 in cash. Because both corporations have separate budgets for cash and donations of products, Ms. Rossiter says, the companies were able to help to a greater extent than if the charity had just solicited cash. For example, she says, “our organization received higher quality refrigerators than our cash budget would have afforded.”
