When you receive some form of in-kind donation from corporations or individuals, you may confront the difficulty of measuring the value of the product. This is because determining the product’s value has a direct bearing on the tax benefits the donor will receive.
The Value of In-kind Donations / Standard for Measuring the Value of Products

출처: pixabay.com

Developing a “Standard for measuring the value of  in-kind donations” is essential. The implementation of a detailed and clear guideline may improve how to put it into practice, as shown in the survey, Network for improving the in-kind donation system, that started to raise awareness about in-kind donations in 2019, and the Analysis of in-kind fundraising and improvement research survey was conducted by Community Chest of Korea in 2016.

When we measure the value of an in-kind donation, a variety of guidelines and standards are applied to determine the value of the product such as the name of the donor, method of donation, and the condition of the product, as it is not possible to include all the different types of cases.

An in-kind donation helps to raise social awareness by making its practice easy, ways of sharing accessible, and keeping the environment clean by recycling valuable products and eventually solving environmental problems.

There might be limits as it applies and interprets the related legal framework into different types of cases. Nevertheless, let us learn more about the minimum standards that need to be fulfilled.


  1. When you receive an in-kind donation, you must record it as revenue in the period you receive it

  • The Accounting Standards for Public Interest Corporation stipulates that you should make sure to record cash or in-kind donation as revenue as soon as they are received.
  • The most recent inspection conducted by the Department of Social Welfare points out that profits from donated goods to sell at the bazaar should be measured as the bazaar’s sales revenue. A response from the National Tax Service, however, states, “The amount of donation for which you could issue a receipt is considered the Book Value whether the purpose is for charitable contributions or bazaars. Therefore, you should not issue a donation receipt for profits from bazaars.”

Reference:  Accounting Standards for Public Interest Corporation, Article 26, Paragraph 1/ Korean Accounting Standards (2017), ‘Accounting Guide for Nonprofit Organizations’ p. 53~54


2. In-kind donations are measured at ‘Fair Value’

  • Fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. Unfortunately, there is no stipulated formula by law.
A Valuation Method of In-Kind Donations by Measuring Fair Value
Types of In-Kind Donations Examples of Measuring Fair Value

Tangible Asset

Market Value

But where there may not be a market value,

Net Realizable Value which enables to calculate the same or similar asset on cash transactions

or Assessed Value recognized from a professional appraiser organization

Inventory Asset,

Other Goods

Market Value,

Market Value of similar asset, etc.

Reference: Accounting Standards for Public Interest Corporation, Article 26, Paragraph 2 and Article 33, Paragraph 2 / Korean Accounting Standards (2017), ‘Accounting Guide for Nonprofit Organizations’ p. 53~54


3. In-kind donations are measured at fair value or book value based on the types of donors (organizations)

Measurement for Donation Value by Donor and Recipient Organization
Donor Recipient Organization Donation Value


Legal Charitable Organization

Book Value of a company

Designated Charitable Organization

Book Value of a company

(Excluding related-party donation)


Legal Charitable Organization

Book Value of ownership

Designated Charitable Organization

Market Value, Book Value

(Choose book value if the market value is lower)

*Business follows Enforcement Decree of the Corporate Tax, Act Article 37, Paragraph 1 /Individual follows Enforcement Decree of the Income Tax Act, Article 81, Paragraph 3

**Individual includes a Sole Proprietor

  • Standard for in-kind donations measurement depends on the current fair market value.
  • Fair Value is Market Value and Book Value. ‘Market Value’ refers to the market price traded in the market, and ‘Book Value’ refers to the costs of donated goods manufactured or purchased and the cost of supplies.
  • When receiving all types and items of in-kind donations, it may be difficult to apply a single guideline to measure them. At the same time, there are no tax laws or specified criteria for the value of donated items.

Reference: Seoul, Donation Value Guide, p.94, 2019. Seoul Metropolitan Government / A Study on the Intermediary Experience of Product Philanthropy between Corporations and NPOs: Exploring for the Development of Product Philanthropy Systems, Lee Eon Jung, Journal of the Korea Convergence Society, 5(4), pp. 129-136


4. A document proving the amount of the donation is required

Evidentiary Document based on Book Value and Market Value
Distinction Product Standard Standard Documents of Proof

Book Value


Distribution of Goods

Supply Price

(Manufacturing cost or Acquisition Price)

Select from:

Cost Statement

Verification of the Book Value

(or Document to verify the Book Value)

Purchase Transaction Data

Market Value

Purchased Goods

Purchasing Price

Purchase Receipt

*Donor has responsibility for all Evidentiary Document

  • There are no tax laws or specified criteria for the value of donated second-hand items.
  1. It is difficult to determine the value of second-hand items. Therefore, an internal standard should be established.
  2. The most common way to measure a second-hand item’s value is finding the online price. However, the price can vary greatly depending on online shopping sites, and some might not have the item at all.

          In the case of Beautiful Store, it generates from the previous year’s actual sales price to determine each item’s internal standard measurement.

A reasonable depreciation rate and internal standard measurement will properly apply if an item is old or may not be in saleable condition. In this case, the standard measurement shall be consulted with the local jurisdiction or you must keep the records that support it.

  • Unacceptable documents for verification: transaction statement, receipt (acceptable with a certificate of business registration), estimate statement, unit price list, etc.


5. Establish internal guidelines for the donated item

  • Internal guidelines are provided in advance to individuals or businesses that intend to make in-kind donations to deal with types of unacceptable donated items and find out the donation value of the items.


Reference for establishing internal guidelines

Beautiful Store

Unacceptable donation items: items that have been creating a potential conflict of interest, illicitly purchased items, food expiration date is 30 days or less, bedding, underwear, various kinds of used clothing, damaged items, percussion instruments, pirated DVDs, worksheets, adult books, book binding, books published more than seven years ago, animals for taxidermy in violation of the law, country-of-origin labelling on processed food is unclear, etc.

Ministry of Health and Welfare ‘Charity Food Donation Guidelines 2020’

Suggest to label itemized expiration date for immediate consumption or non-edible food or drink items:  cutoff date for charitable donation when contributing for food and household items.

In-kind Donation Network ‘Rapid tour of in-kind donations’

Requirements for the donation receipt: in-kind donation to *** welfare center and regulations for managing donor.


6. Pro bono charitable donations are not recognized as revenues

  • It is hard to measure pro bono charitable donations with a reasonable calculation, so pro bono charitable donations are not recognized as revenues, unlike cash donations or in-kind donations.

이 글은 <기부문화연구소> 블로그에 있는 한국어 콘텐츠 원문을 Heather Shin 님께서 자원봉사로 번역해 주셨습니다.
This context is translated by Heather Shin, as a volunteer. The original Korean context is in the blog of <The Center on Philanthropy at The Beautiful Foundation>.