A local firm offers your charity six months of free legal advice. A supermarket offers pallets of stock nearing its expiry date. A volunteer who happens to be an accountant offers to do your books. Each of these is an in-kind donation, and each one is treated differently in your accounts.
The short version: donated goods, facilities and services normally count as income at what they are worth to you. Ordinary volunteer time never does. And a donation you would never have paid for may be worth nothing at all in accounting terms, however grateful you are to have it.
If in-kind support is becoming a real part of your income and you are not sure it is being handled properly, that is worth a look at your whole fundraising picture.
What counts, and one thing that doesn’t
In-kind support covers goods, facilities and services given to your charity rather than money: stock, equipment, office space, professional time, the use of a vehicle. The SORP treats them as one family, because they all bring an economic resource into the charity without cash changing hands.
One thing that looks like a donation and is not. A commercial discount offered in the normal course of trade – the supplier who knocks 20% off because you are a charity – must not be recorded as a donation. It is an inducement to buy at a lower price, and the only figure that enters your accounts is what you actually paid.
The question to ask before you accept
Gratitude is a bad basis for a decision. Trustees have to act in the charity’s interests, and some offers cost more than they give.
Work through the practical side first. Where will it be stored, who will move it, what happens to the portion you cannot use, and what does disposal cost? Goods near their expiry date, or goods for which a cheaper substitute already exists, are worth less than their headline value and may be worth less than the trouble of handling them.
Then check the strings. A donation given on terms that require you to keep using the item stops you selling it, and removing that restriction later may itself cost money. That reduces what the gift is worth to you, and it is a reason to settle the terms in writing before the item arrives rather than after.
Then check the donor. Association is part of what you are accepting. If the offer comes with branding, publicity or anything the business gets back, it may not be a donation at all – that is corporate sponsorship, and it carries a different tax and VAT treatment.
Saying no is a legitimate trustee decision. Minute the reasoning and the refusal stops looking like ingratitude and starts looking like governance.
Not sure how much of this you are getting wrong?
In-kind support is one of those areas where small charities discover, usually at year-end, that nothing has been recorded for three years. If you want an outside view on how your income is being classified before your examiner raises it, a free Charity Consultation is the place to start.
What donated goods are worth
Goods are measured at fair value, which the SORP defines as the price you would have paid on the open market for an identical or comparable item. Not the retail price the donor quotes you, and not what it cost them to make.
When there is no obvious market price, the SORP gives you three routes. You can work from the economic benefit of using the item, from what it cost the donor, or – for goods you expect to sell – from the estimated resale value after deducting the cost of selling them.
There is relief for charity shops. Where it is impracticable to value goods reliably when they arrive, which is the normal situation for high-volume, low-value second-hand donations, you recognise the income when the goods are sold or distributed instead of on the day they come through the door.
Beyond that, the treatment follows the use. Goods you will keep and use become fixed assets, and they depreciate like anything else you bought. Goods you will hand to beneficiaries become stock, with the income shown under donations. Goods you will sell also become stock, with the income shown under trading activities rather than donations.
What donated services and facilities are worth
Here the test changes, and this is the part that trips people up.
Services and facilities are measured at the value of the donation to your charity – the price you estimate you would have paid on the open market for something of equivalent use to you. That value can be lower than the market price. It can never be higher.
The SORP’s own example is a premium service given free where you would only ever have bought a standard one. You record the standard price, because that is the benefit to you.
And the line that decides most cases: if you would not have purchased the service or facility at all had it not been donated, the value to your charity is expected to be nil. A donated brand strategy your charity was never going to commission is worth nothing in the accounts, whatever the agency’s day rate says. This is not ingratitude. It is the difference between what something is worth to the giver and what it is worth to you.
Where the service is used up immediately, an expense of the same amount goes in alongside the income, so the two cancel out in the year. Where it is not consumed immediately, it is carried as an asset.
Volunteer time, and why you cannot count it
The contribution of ordinary volunteers must not be included as income. The SORP is direct about it: you might not have employed anyone in their absence, they often work alongside paid staff rather than replacing them, and there is no market comparator to price them against. Without a reliable measurement basis, they stay out of the accounts.
There is one exception, and small charities meet it more often than they realise. Where the service a volunteer gives is one they would normally provide through their trade or profession for a fee, it can be measured and it is recognised. The SORP’s examples are a professional accountant acting as an unpaid independent examiner, and a coding expert building your website to your specification. The person is volunteering. The service has a price.
So a solicitor trustee giving legal advice, an architect drawing your plans, a marketing consultant running your campaign – those are donated services, and they belong in the accounts. The same solicitor stuffing envelopes at your fundraiser is a general volunteer, and that time stays out.
What goes in the accounts, and what goes in the report
If you prepare accruals accounts, every charity has the same disclosure duties here regardless of size. You have to state the accounting policy you use to recognise and value in-kind support, set out the nature and amounts of what you received, note any unfulfilled conditions attached to resources you have not recognised, and give an indication of the other non-cash resources you benefited from without recognising.
That final requirement is the one that quietly matters. Volunteer time cannot go in the accounts as income, so it goes in the trustees’ annual report instead – the nature and scale of what volunteers do for you. Without it, a reader has no way of seeing how your charity actually runs. The annual report is where the full picture gets assembled.
None of this works without records made at the time. Valuing a donation eight months later, from memory, is how charities end up with figures they cannot defend. Whatever your record-keeping system looks like, it needs a place for goods and services in, with the date, the donor, the basis of valuation and who decided it.
If a donation comes with a stated purpose, that is a restriction, and it belongs in the right fund. The rules on restricted and unrestricted funds apply to gifts in kind exactly as they do to cash.
Which of these applies to your charity
Everything above comes from SORP 2026, which applies to accounting periods beginning on or after 1 January 2026 and only to charities preparing accruals accounts. Charitable companies always prepare accruals accounts. Other charities have a choice, up to a limit.
That limit is moving. For financial years ending on or after 30 September 2026, the ceiling for receipts and payments accounts doubles from £250,000 to £500,000 of gross income for non-company charities. Several other thresholds shift on the same date, including the point at which an independent examination is required and the audit threshold.
The practical effect is that a group of charities currently doing full SORP accounts will become eligible to drop to receipts and payments. Eligible is not the same as sensible. Receipts and payments accounts show cash in and cash out, which means donated goods and services largely disappear from view. If in-kind support is a serious part of how your charity operates, simpler accounts will understate what you do to anyone reading them, including funders. That is a trustee decision to take deliberately, not a default to fall into because the threshold moved.
Two dates, two different tests, and they do not line up: the SORP runs off when your period starts, the thresholds off when your year ends. Check both against your own year end before assuming either applies to you.
This article is general information for UK charities, not advice on your accounts. Valuation judgements and the choice of accounting basis should be discussed with your independent examiner, auditor or a charity accountant before you commit to them.
If the wider question is how your charity records, reports and governs what comes in – not just the in-kind part – that is what our charity governance support is for.
