I recently was interviewed by a reporter from the Chronicle of Higher Education who was interested in learning about the challenges of in-kind donations. I’ve also had development directors ask me about what to look for when evaluating these types of gifts as well. So, I thought I’d take a few minutes and mention a few things that I’ve learned from experience that may help in the future.

Let me start by mentioning something that happened more than once when I was a president. We’d all get to campus on Monday morning only to learn that someone had towed their junk car to the back of the Collision Repair program area and just left it sitting. They would hope that we would value the car at thousands of dollars they could then use as a tax write-off. We, of course, had no option but to tell them (nicely) to remove the car.

The second time this happened we promptly established a policy that almost all colleges use: first, all donations of any kind must go through the foundation office; second, if the donation is from a private individual or corporation and is accepted, then the valuation of that donation for tax purposes is between them and the IRS. How we valued the donation was separate from their tax valuation.

This eventually led to a set of questions that I recommend my college clients consider as a method for evaluating in-kind gifts:

1. How does the in-kind donation further the strategic vision and/or purpose of the college/program/curriculum? If the donation provides you with resources that ultimately saves you budget outlay, then it’s a great start.
2. What is the true value of the donation to the college? If the donation is mostly outdated technology, then the value is minimal.
3. What is the cost to use the donation? For example, let’s say the donation is a piece of equipment that has a market value of $50,000 but to use the equipment you need to make $100,000 in renovations/remodeling, then the true value of the donation in terms of your budget may be a negative number unless you were already planning on buying that equipment and making the necessary renovations/remodeling.

For instances where the answers to these questions are all positive, then it’s an easy call. However, when the answer to one or more of these questions is negative it’s another matter. But at least now you have data that you can show the donor and potentially use that data for further cultivation. For example, perhaps the donor would be willing to increase the size of their donation by adding $100,000 in cash to cover the renovation/remodeling on top of the in-kind equipment donation.

As I’m fond or reminding myself and my clients, if something looks like it could be a lemon, let’s see if there is some lemonade in there somewhere. But you won’t know that unless you have a reliable process in place first.