Understanding and Reporting In-Kind Contributions

ElectaFile Short Summary: Committees can accept contributions both in cash (less than $50!), check, and credit card….but also “in-kind” which means a non-monetary contribution (e.g., Bojangles Biscuits for the fundraiser) that must be tracked and reported.

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In-Kind contributions are simply non-monetary contributions. Treasurers must track them, report them, and they count against contribution limits.

Imagine Walter Teaberry, a donor, who wrote a $500 check to the campaign but also provided all the barbecue eaten at the campaign lunch on Football Saturday at Carter-Finley. Although this is probably low for the types of tailgates that the Wolfpackers throw, let’s assume the barbecue cost $4,200 from that place out in McGee’s Crossroads.

Pop Quiz: How large a contribution has Mr. Teaberry made?

Answer: It’s not only $500. It’s in fact $4,700. In-kind contributions are same as cash.

Treasurers have to assign the fair market value of a non-monetary thing of value provided to the campaign and report that FMV as an in-kind contribution.

How Do You Value In-Kind? Lawyers have all sorts of ways to determine FMV…basically, it’s what a willing buyer would pay a willing seller. In the everyday world, the easiest valuation of FMV is what something cost the contributor. In the above example, of Bojangles biscuits, find out what the contributor paid Bojangles. Or what the contributor paid for the barbecue. Some examples are a bit trickier—for event space, what would the space rent for? Measure thrice and cut once on FMV Valuation for in-kind contributions. If you need help, ask.

How Do You Report In-Kind? If you’re paper filing, you’re going to complete two forms to report in-kind. This is so because you’ve got to treat the contribution as both a receipt and an expenditure or else your committee will show phantom cash. Electronic filing software (whether ElectaFile or someone else…) completes both forms for you.

For the paper filers, here’s the State Board’s word on it:

Where Do People Mess Up? Here’s where people mess up: they forget to record in-kind contributions from high dollar donors who then accidentally exceed campaign contribution limits. The campaign then at least has to issue a monetary refund for a non-monetary contribution. This creates a cash flow problem. At worst, campaigns are accused of attempting to avoid contribution limitations. This is no good, very bad.

The most common historical example in North Carolina are campaign flights. High net worth individuals make aircraft available to candidates who need to hop around our great and large State of North Carolina. The market value of those flights should be reported as donations, but if they are, they often well exceed the individual campaign contribution limits. It’s a mess that gets out of hand quickly.

What’s to be done? Be cognizant of in-kind contributions. Some are obvious (think Biscuits…). Some are subtle (think event space that isn’t regularly rented…). In all events, do your work early and document so you’re not playing Clue? under pressure when the State Board comes calling…

See you Thursday!

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