Giving in Kind vs Cash in Nigeria: How Churches and Mosques Value Donations

When you give ₦100,000 to a church or mosque, the accounting entry is usually straightforward: the organisation receives cash of ₦100,000. When you donate bags of rice, sound equipment, land, vehicles, building materials, or professional services, the organisation has to determine a reasonable naira value before recording the donation.

This difference explains why churches and mosques often request an invoice, receipt, delivery note, purchase evidence, valuation report, or written description for non-cash donations. The purpose is not necessarily to place a value on a person’s spiritual act. It is to create a reliable financial record showing what was received, when it was received, and how it will be used.

In Nigeria, donations may include tithes, offerings, zakat, sadaqah, welfare contributions, building funds, mission support, food items, clothing, vehicles, land, and equipment. The organisation may treat each item differently for accounting, internal control, tax, and reporting purposes.

Last Updated: September 26, 2026

What Is a Cash Donation?

A cash donation is money given through physical notes and coins, bank transfer, card payment, USSD, direct debit, cheque, payment gateway, or another traceable channel.

Examples include:

• ₦50,000 transferred to a church building account.
• ₦25,000 paid as sadaqah to a mosque welfare fund.
• ₦10,000 placed in an offering envelope.
• ₦500,000 paid by a company into a religious organisation’s bank account.
• ₦2 million contributed toward a religious school or community project.

The value of a cash donation is normally its face value. A transfer of ₦250,000 is recorded as ₦250,000, subject to any bank charges or payment-processing deductions.

For example, if a worshipper pays ₦100,000 and the payment platform deducts ₦1,500, the gross donation is ₦100,000 and the net bank receipt is ₦98,500. The organisation may record:

The accounting treatment may differ depending on the organisation’s accounting policy, but the supporting payment record should show the gross amount, deduction, and net settlement.

What Is an In-Kind Donation?

An in-kind donation is a contribution made with goods, assets, property, or services rather than money.

Common examples in Nigeria include:

The organisation does not normally value these items by guessing or by using the donor’s preferred amount. It looks for evidence of value, such as:

• A supplier invoice.
• A recent purchase receipt.
• A quotation from a recognised supplier.
• A market-price comparison.
• An independent valuation.
• The condition, age, and usability of the asset.
• Transport, installation, and delivery records.
• A board or finance committee approval for significant assets.

A new generator purchased for ₦2,000,000 may be recorded near that amount if the receipt and delivery documents are available. A five-year-old generator donated by a member should not automatically be recorded at the original purchase price. Its current condition and market value are relevant.

How Churches and Mosques Usually Value Donations

A church or mosque generally uses a valuation hierarchy. The stronger the evidence, the more defensible the recorded amount.

Cash and bank transfers

Cash donations are valued at the amount received. Bank statements, payment-platform reports, collection sheets, and numbered receipts provide evidence.

For weekly offerings, the organisation may count the collection in the presence of two or more authorised people. A typical control record could show:

The exact procedure depends on the organisation’s internal policy.

Goods with an invoice

When a donor purchases goods specifically for the religious organisation and provides the invoice, the invoice price may be a useful starting point.

Suppose a company buys and donates:

• 100 bags of cement at ₦12,000 each.
• Total invoice value: (100 \times ₦12,000 = ₦1,200,000).

If the goods are delivered immediately and are in normal condition, the organisation may record an in-kind donation of ₦1,200,000, subject to its accounting policy and supporting documents.

Used goods and assets

Used items require more judgment. A donated office desk bought years earlier for ₦200,000 may not currently be worth ₦200,000. A comparable desk may sell for ₦80,000 in the local market.

A practical valuation record could be:

The figure should be supported by a written explanation rather than simply selected because it produces a preferred result.

Land and buildings

Land and buildings are materially different from food or office supplies. A religious organisation may require:

• Deed or conveyance documents.
• Survey plan.
• Evidence of ownership.
• Governor’s consent where applicable.
• Planning and title documents.
• Independent valuation.
• Approval by the trustees or governing body.
• Evidence that the property was actually transferred.

A donor’s verbal statement that a plot is “worth ₦20 million” is not equivalent to an independent valuation or valid transfer documentation.

Donated services

A volunteer who spends ten hours painting a mosque or preparing church accounts may provide valuable assistance. However, donated services are not always recorded as income and expense in the same way as goods.

The organisation’s treatment depends on whether:

• The service would otherwise have been purchased.
• The service creates or improves an asset.
• A measurable invoice or professional valuation exists.
• The organisation’s accounting framework requires recognition.
• The donor is providing ordinary volunteer labour or a specialised professional service.

A contractor who formally donates construction work worth ₦1,500,000 may provide stronger evidence for recognition than a volunteer who assists informally for two days.

Cash Versus In-Kind Donations

The following table shows the major practical differences.

A cash donation gives the religious organisation purchasing flexibility. An in-kind donation may be more useful where it matches a defined need, such as food for a welfare programme or roofing materials for a building project. The accounting value, however, does not automatically equal the social usefulness of the item.

Nigeria’s Tax Treatment of Religious Donations

Tax treatment depends on the identity of the donor, the recipient, the purpose of the payment, and whether the religious organisation conducts a separate business activity.

Religious income and tax exemption

Under the Nigeria Tax Act, 2025, income tax treatment for an organisation depends on the applicable statutory exemption and whether the income arises from a qualifying religious, charitable, or public-interest activity rather than a separate trade or business.

The former Companies Income Tax Act, Section 23(1)(c), provided that profits of a company engaged in ecclesiastical, charitable, or educational activities of a public character were exempt where the profits were not derived from a trade or business carried on by the organisation. The new Nigeria Tax Act, 2025 should be consulted for the operative provision and transitional application relevant to the accounting period.

This distinction matters. A church or mosque may receive donations for worship, welfare, missions, zakat distribution, or community assistance. A separate commercial activity—such as a hotel, bookshop, event centre, school, paid conference, or catering operation—may require separate tax analysis.

Income tax exemption does not mean every transaction by a religious body is automatically free from every tax. The nature of the transaction remains important.

Company donations

Section 164 of the Nigeria Tax Act, 2025 provides for deductions for qualifying donations made by a company to eligible funds, bodies, and institutions in Nigeria. The provision covers religious, charitable, educational, scientific, statutory, and other qualifying institutions identified by the Act.

The deduction is subject to statutory conditions and limits. NIPC’s 2026 guide summarises the key restriction as a maximum deduction of 10% of the company’s profit before tax, subject to the requirements in Section 164 and the status of the recipient.

For a company, the following documents are important:

• Board approval or authorised payment instruction.
• Evidence of payment or delivery.
• Receipt or acknowledgement from the recipient.
• Recipient’s legal name and registration details.
• Description and purpose of the donation.
• Value and supporting invoice for in-kind donations.
• Evidence that the recipient is an eligible institution.

Valuing non-cash donations under Section 164

Section 164(6) of the Nigeria Tax Act, 2025 states that where a donation is not made in cash, its value for the section is the lower of:

1. The market value at the time of donation; or
2. The consideration paid for the item when it was acquired.

This rule prevents a donor from purchasing an item for ₦500,000 and later claiming a ₦900,000 deduction merely because the estimated market price increased.

Example: lower of cost or market value

A Nigerian company buys computers for ₦3,000,000 and donates them to an eligible religious institution. At the date of donation:

• Acquisition cost: ₦3,000,000.
• Current market value: ₦2,600,000.
• Value under Section 164(6): ₦2,600,000.

If the market value were ₦3,400,000, the lower amount would be the acquisition cost of ₦3,000,000.

The company would still need to satisfy the other statutory conditions. A donation receipt on its own does not guarantee deductibility.

VAT and religious organisations

VAT is a tax on taxable supplies, not a tax imposed simply because an organisation receives money. A voluntary donation without a direct supply of goods or services in exchange is different from a sale.

For example:

• A freewill offering is generally not the same as payment for a taxable service.
• Selling books through a religious bookshop is a transaction that requires separate VAT analysis.
• Renting out an event hall for a fee is different from receiving a donation toward worship activities.
• Tuition charged by a religious school must be considered under the applicable VAT rules and schedules.

The Nigeria Tax Administration Act, 2025, Section 22, requires VAT returns for taxable persons in the circumstances covered by the Act, generally by the 21st day of the following month. Section 23 addresses electronic fiscalisation where the Nigeria Revenue Service deploys an Electronic Fiscal System.

Religious organisations that combine donations with commercial activities should keep separate records for offerings, zakat, donations, sales, rent, tuition, conference fees, and other receipts.

How to Record a Donation

A basic donation record should answer five questions:

1. Who gave it?
2. What was given?
3. When was it received?
4. What was its value?
5. What fund or purpose will receive it?

Cash donation example

A member transfers ₦250,000 to a church building fund.

Possible record:

The organisation may classify the amount as restricted or designated funds if its policy or donor instruction limits the use.

In-kind donation example

A donor delivers 40 bags of rice. Each bag has a documented market value of ₦85,000.

[ 40 \times ₦85,000 = ₦3,400,000 ]

Possible record:

When the rice is distributed, the inventory is reduced and welfare expense or programme expenditure is recognised according to the organisation’s accounting policy.

Restricted donation example

A donor gives ₦1,000,000 specifically for borehole construction. The finance team should not automatically treat the amount as unrestricted general income. The record may identify:

• Donation received: ₦1,000,000.
• Restricted purpose: borehole project.
• Project expenditure to date.
• Unspent balance: ₦1,000,000 less approved expenditure.
• Supporting invoices and payment approvals.

The restriction is a governance and reporting matter. It also helps members understand whether money raised for a project was used for that project.

Documents for In-Kind Donations

A practical donation file may contain:

• Donor’s name and contact details.
• Date of donation.
• Description and quantity.
• Serial numbers for equipment.
• Condition of used assets.
• Purchase invoice or market-price evidence.
• Delivery note.
• Photographs for high-value items.
• Valuation report for property or major assets.
• Transfer documents.
• Receipt or acknowledgement letter.
• Intended purpose.
• Approval by authorised trustees or finance officers.
• Evidence of distribution or use.

For a vehicle, the file may also include the vehicle registration documents, chassis number, insurance details, transfer documentation, and a condition report.

For land, the organisation should keep the title documents and evidence of lawful transfer. Recording land at ₦50 million without proof of ownership does not create valid ownership.

Internal Controls for Churches and Mosques

A basic control system reduces disputes and makes reporting easier.

Separate funds by purpose

Records can distinguish:

• General offerings.
• Tithes.
• Zakat.
• Sadaqah.
• Welfare funds.
• Building funds.
• Mission funds.
• Education funds.
• Emergency relief funds.

The labels used should match the organisation’s constitution, donor instructions, and accounting policy.

Use two-person counting

Cash collections should be counted by at least two authorised people where practicable. Both people can sign the count sheet, which should agree with the bank deposit and accounting entry.

Issue receipts for significant donations

A receipt for an in-kind donation should identify the item without exaggerating its value. For example:

Received from ABC Trading Limited: 200 bags of cement delivered on September 26, 2026, for the mosque building project. Recorded value: ₦2,400,000 based on supplier invoice dated September 24, 2026.

Maintain an asset register

A donated generator, bus, computer server, sound system, or building should have an asset-register entry showing:

• Description.
• Date received.
• Recorded value.
• Location.
• Custodian.
• Serial number.
• Condition.
• Disposal or transfer details.

CAMA 2020 contains governance and reporting provisions relevant to incorporated trustees and other registered bodies. Section 839 addresses circumstances involving misconduct or mismanagement and the protection and proper application of association property. The official CAMA text is available through the NIPC legislation repository.

ToolBase Tools That Can Help

A Donation Receipt Template can help churches, mosques, ministries, and welfare committees issue consistent records for cash and in-kind donations. For non-cash gifts, the receipt can include the item description, quantity, condition, estimated value, donor details, and intended purpose.

A Percentage and Tax Calculator can help a company calculate the statutory donation limit under Section 164. For example, if profit before tax is ₦50,000,000 and the relevant limit is 10%:

[ ₦50,000,000 \times 10% = ₦5,000,000 ]

This is only a calculation of the stated percentage limit. Eligibility, documentation, recipient status, and other provisions still require separate review.

You can also use ToolBase’s Budget Planner to separate general funds, building funds, welfare allocations, and project spending. For monthly compliance tracking, the Tax Calendar can help organise filing and payment dates.

Common Mistakes to Avoid

• Recording donated goods at the donor’s preferred value without evidence.
• Treating the original price of an old asset as its current value.
• Mixing tithes, offerings, zakat, sales, rent, and school fees in one undifferentiated account.
• Issuing a receipt that does not identify whether the contribution was cash or in kind.
• Treating a donation receipt as automatic proof of corporate tax deductibility.
• Claiming a tax deduction where the recipient is not an eligible institution under the relevant law.
• Failing to document property transfers.
• Selling donated items without recording the disposal.
• Using restricted project funds for unrelated spending without proper authority.
• Assuming income-tax exemption eliminates VAT or other transaction obligations.

Conclusion

Cash donations are usually valued at the amount received, while in-kind donations require evidence-based valuation. In Nigeria, Section 164(6) of the Nigeria Tax Act, 2025 uses the lower of market value and acquisition cost for qualifying non-cash donations, while Section 164 also imposes conditions on deductions by companies. Proper receipts, valuation records, bank evidence, delivery notes, asset registers, and separate fund records help churches and mosques demonstrate how donations were received and applied.

This article is for educational purposes only and does not constitute professional advice. Consult a qualified professional for your specific situation.

References

The Nigeria Tax Administration Act, 2025 provides the framework for taxpayer registration, records, VAT returns, electronic fiscalisation, assessments, and enforcement. Its Section 22 addresses VAT returns, Section 23 addresses electronic fiscalisation where deployed, and Section 31 concerns books and records. The official gazette is available through the Tax Appeal Tribunal copy of the Act.

Section 164 of the Nigeria Tax Act, 2025 covers qualifying company donations, including donations to religious, charitable, educational, and scientific institutions. Section 164(6) states the valuation rule for donations other than cash. The NIPC 2026 statutory relief guide summarises the applicable conditions and limits.

The Companies and Allied Matters Act, 2020 contains provisions relevant to incorporated trustees and association property, including Section 839. The official text is available through the Federal Government Gazette hosted by NIPC.