Valuing In-Kind Donations as Community Investment
LBG Canada companies have contributed a value of $736,624,678 ($736 Million) in-kind donations to community since 2007. These contributions—ranging from furniture and food to technology and core products—are one of the four keyways companies invest in community valued for eligibility in reporting as Community Investment annually.
While many companies include in-kind giving as part of their portfolio, the scale of investment varies widely between modest donations, to significant proportions of the total value of Community Investment reported annually.
Yet many still don’t report in-kind contributions with confidence, or at all. This is linked to uncertainty around how to value in-kind, i.e. assigning a fair and defensible value to be included in public reporting.
Since 2005, LBG Canada companies donating in-kind AND seeking to include that in-kind value in reporting have been guided by the 'cost to company’ principle. This is a clear example of how reporting to a standard enables confidence and credibility in reporting.
What Is “Cost to Company”?
the cost of manufacturing or producing the good which is then invested in community
any cost incurred as the donor company goes through the process of investing in-kind, and/or
the asset value of the in-kind donation, as recorded on the company’s balance sheet.
These contributions can be classified into three distinct types:
Distributive In-Kind Donations: These are used but functional items such as vehicles, computers, and office furniture. Community recipients can either use them directly or refurbish and redistribute them for further use.
Proactive In-Kind Donations: Proactive donations involve a company’s deliberate plan to donate a certain quantity of products to community groups as part of an annual community investment strategy.
Reactive In-Kind Donations: These donations involve products manufactured for sale that remain unsold due to factors such as changing consumer preferences or nearing the end of their useful life. Although these items still hold value for the community, they would otherwise be discarded or disposed of if not donated.
Valuing In-Kind Contributions
Distributive Donations
These are typically recorded as depreciated assets. For example, a $2,000 laptop depreciated by 25% annually would be valued at $633 after three years. The eligible community investment value is the amount removed from the balance sheet at time of donation. CRA guidelines also suggest comparing this value to a third-party fair market assessment and using the lower amount to avoid overstatement.
Table 1: Example of a Depreciation Schedule
(For a $2,000 asset with 25% annual depreciation)
Proactive Donations
The eligible value includes production and distribution costs. If specific costs are commercially sensitive (e.g., software, pharmaceuticals), companies work with the auditor (SiMPACT) to determine a reasonable wholesale value using publicly available data.
Reactive Donations
These often include surplus or expired inventory. While such items can still benefit the community, their book value may be zero or negative. Companies may mistakenly report retail or fair market value, but per CRA and LBG guidance, only the lowest of book or fair market value should be used.
Special Cases
Food Donations
In 2022, 93% of LBG Canada voting companies agreed that reactive food donations qualify as community investment, but at 50% of production cost. This standard will be reviewed in 2025 and may align with Food Banks Canada’s weight-based valuation ($3.52/lb).
Consumer Products
Valuation begins with inventory cost and is subject to the same principles outlined above. It’s essential not to overstate value by referencing full retail pricing—particularly for unsold or outdated items.
Donated Used Assets
Many companies now repurpose used assets such as furniture or electronics. Donation is one of several disposal options and is often the most impactful. The value eligible for reporting is the asset’s assessed book value, not the recipient’s perceived benefit.
It’s important to distinguish between the value to the company (used for reporting) and the value to the recipient (used for total community footprint analysis). Only the former is included in the company’s verified community investment total.
Accurately valuing distributive in-kind donations ensures alignment with the LBG Model and consistent reporting.
Interested in more information? Please reach out for the full briefing note here.