What’s It Really Worth?

Let’s face it.  We in the fundraising profession love to get donations, especially checks with a digit followed by a lot of zeroes.  Sometimes they do come with restrictive strings attached, but they are easy to put a value on.  It makes our financial departments, aka accountants, very happy.  Who doesn’t love getting a financial donation to our organization?

We also get other kinds of donations.  When organizations have gala events, volunteers and staff often seek inkind donations to help lower the cost of the event or items that they can auction to the highest bidder.  These are usually valued at the going retail rate that the business charges to its customers.  Some businesses offer the professional services of their employees, like technical skills or legal knowledge for the sake of an organization.  This type of donation can be valued by the salary the company pays to those employees.

However, many organizations do accept other kinds of donations.  Over the years, I have seen newspaper ads, television commercials, and even billboards encouraging people to donate their cars, boats, and motorcycles.  I have known donors who have given fine art, like paintings and sculptures, or even property as final bequests.  I even know of at least one organization that welcomes donations of jewelry and coin collections.  Those kinds of things are a little harder for the bookkeepers to enter in the ledger.  How do you put a financial value on those kinds of donations?

My advice is, unless you are a certified professional who specializes in a field like auto sales, real estate appraisal or fine art appraisal, you don’t.  Before you accept an offer of an inkind donation, instruct the person offering the gift to get the item appraised by an expert outside your organization.

Having a donation appraised will benefit your donor and your organization.  By having a professional place a value on the gift, the donor will know its true worth and that will help them when they are preparing their taxes.  An appraisal will also aid your bookkeeper so they can accurately enter the gift in their records.  If an untrained professional like yourself places a value on the gift, neither party involved can know the true value until it is too late.

An appraisal can also inform your organization of any problems involved with the gift, and you may choose not to accept it.  An example would be when a gift of land is involved.  The property may have been in an area that has been contaminated during past use, like illegal dumping or underground storage tanks leaking gas or oil into the ground, or a building could have structural issues, and if you accept the gift, your organization would be responsible for the expensive clean up process or repairs before you can use or sell the property.  That could be a devastating problem for your organization, and would be a good reason to decline that gift.  Another example would be the donation of a piece of fine art that, through the appraisal process, is found to be a forgery.  And finally, one more example would be the vehicle that is being donated has hidden mechanical problems that would lower the value of the gift.

The AFP Code of Ethical Standards and Principles states “Members shall take care to ensure that donors receive informed, accurate and ethical advice about the value and tax implications of contributions.”  I urge you to always have your donors go to a professional to have their inkind gift appraised and then consult with their lawyer before you accept the donation.  It will protect them and your organization, and they will trust your nonprofit more because of your professionalism.

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About Richard Freedlund

Richard Freedlund has been active in the nonprofit sector in a number of ways, both professionally and as a volunteer. He is the founder of Greater Good Fundraising, a business that helps schools and organizations raise money for their programs while accomplishing something positive for the community. After living in Oregon for 27 years, he has returned to his hometown of Rockford, Illinois and hopes to make his mark on the nonprofit sector there. He is the father of a talented jazz musician and the companion of a loving Springer Spaniel and two cats. To contact Richard for consulting, fundraising, or speaking opportunities, email greatergoodfundraising@gmail.com or reach him on Twitter.com @ggfundraise
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2 Responses to What’s It Really Worth?

  1. Gerie Greenspan says:

    Richard, thank you for these examples. I once had an incident where the business donor of a gem (for raffle) provided an appraisal that was later disputed by an outside 3rd party appraiser (from the raffle winner). Outside experts advised the winner that this disparity could trigger an audit, so they felt compelled to return the gift to the organization. Any ideas on that type of situation, where clearly, the donor was in the business and had the special expertise in-house.?? There are reporting rules we discovered that make it in the best interest of the organization to accept in-kind gifts valued at “less than $5,000″, which is a raffle reporting threshold for Michigan.

    • Gerie,
      Thank you for your comments and question. In my opinion, appraisals should be done by an independent professional, not someone associated with the donor or the organization. By your description of the issue, the donor or his/her employee may have given the gem a higher value for tax purposes. It may have had a flaw not visible to the human eye, but the donor did not want that known. I have heard of such issues in the jewelry business.

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