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In Kind Gift Value to Record in Database

  • 1.  In Kind Gift Value to Record in Database

    Posted 11 days ago
    ​​Hi All,

    Just a quick question.  What value can I use to record a gift when the donor is the artist that created the donated item?  I know that the amount the donor can deduct for tax purposes is limited to the cost of materials used to create the art.  But can we record a Fair Market Value for fundraising purposes?

    We are not subject to CASE.

    Thank you!

    Dale

    ------------------------------
    Dale Hailey
    Manager, Gift Services
    Sutter Health Philanthropy
    haileyds@sutterhealth.org
    ------------------------------


  • 2.  RE: In Kind Gift Value to Record in Database

    Posted 11 days ago
    Yes.  You should use the fair market value if one can be easily obtained.  In this case, I would contact a local (to the artist) art dealer for an estimate.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: In Kind Gift Value to Record in Database

    Posted 11 days ago
    BTW, it is acceptable for your quilters to suggest a FMV.  Not only can you use that for internal counting, but for establishing a sales price were you to auction or sell the items.

    However, per IRS Publication 1771, your in-kind donation receipt should never reflect a dollar amount. The receipt should only describe the quilt.

    You are correct in worrying about your donors possibly claiming too great of a deduction.  But what they claim and the proof they use is between them and the IRS.  However, it would not hurt to point them to 561 and their tax advisor for guidance.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard

    On Oct 7, 2021, at 8:48 AM, John Taylor <johntaylorconsulting@gmail.com> wrote:

    See IRS Publication 561 for in-kind donation and valuation issues.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 4.  RE: In Kind Gift Value to Record in Database

    Posted 11 days ago
    Awesome.  Thank you John

    I was fairly certain that was the answer, but it doesn't hurt to verify with the experts!

    I am so grateful for this community of shared knowledge.

    Best, Dale


    ------------------------------
    Dale Hailey
    Manager, Gift Services
    Sutter Health Philanthropy
    haileyds@sutterhealth.org
    ------------------------------



  • 5.  RE: In Kind Gift Value to Record in Database

    Posted 11 days ago
    John, a little different scenario:  If a donor is a contractor, and they build a statue at our facility, would the value of the gift (that we record in our database) be limited to the construction materials used to build the statue, or could it be the full amount that the contractor would normally charge for that work?  My previous thinking was that the donation value was limited to the cost of materials.  I guess I'm wondering if this is any different than the donation of a piece of art by the artist. 

    Thanks again,  Dale







    ------------------------------
    Dale Hailey
    Manager, Gift Services
    Sutter Health Philanthropy
    haileyds@sutterhealth.org
    ------------------------------



  • 6.  RE: In Kind Gift Value to Record in Database

    Posted 11 days ago
    In this new example, the donation would be of their services.  As such, and per IRS Publication 526, the value of one's time is not a tax-deductible gift.  While I know you are not subject to CASE, CASE disallows counting of services.

    I know these are similar but still different.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 7.  RE: In Kind Gift Value to Record in Database

    Posted 11 days ago

    I realize that there are several statements in IRS Publication 526 regarding donors not being able to deduct the value of their time or services. However, is there a succinct statement or paragraph somewhere in IRS documentation that connects this with the donation of gifts-in-kind? Or any suggestions on other language that can be used to educate donors?

    Specifically, we are a social service agency and have quilters donate handmade quilts, which they assign a FMV equivalent to what they think they can sell the quilt for at a craft fair.  I have had conversation with some of these quilters but they don't seem to understand that they are over-valuing their quilts as a donation. 

    Thank you!  Karen



    ------------------------------
    Karen Snyder
    Tubman
    Minneapolis, MN
    ksnyder@tubman.org
    ------------------------------



  • 8.  RE: In Kind Gift Value to Record in Database

    Posted 11 days ago
    See IRS Publication 561 for in-kind donation and valuation issues.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 9.  RE: In Kind Gift Value to Record in Database

    Posted 11 days ago

    Thank you, John, for your input; it is most appreciated!  Unfortunately, Pub 561 isn't much help as it doesn't address the excluding the creator's time in determining FMV.  As we provide shelter beds and clothing to our clients, quilt donations do support our mission and provide budget relief. Otherwise, we would be purchasing bedding… but not a quilt that a donor has valued at $1,000. (These GIKs are not intended for our fundraising auctions.)

     We do follow IRS guidelines for acknowledging gifts-in-kind and all GIKs received are reported on our 990.  Those inflated FMVs do skew our reporting and it does bother me in principal that donors inflate the FMV of their donation. The worst example I have encountered of FMV inflation was a donor who made three separate clothing donations and assigned a FMV of $4,999 to each donation. Of course, the donor-provided FMV is between them and their tax preparer/IRS, but in principal, inflated FMV is one of my pet peeves!  (Thanks for listening!) 



    ------------------------------
    Karen Snyder
    Tubman
    Minneapolis, MN
    ksnyder@tubman.org
    ------------------------------



  • 10.  RE: In Kind Gift Value to Record in Database

    Posted 11 days ago
    The issue of the value of someone's time is addressed in 526.  When it comes to artwork and such (self-created assets), the IRS considers only the cost of materials to be deductible.  Perhaps this webpage is useful:


    But, again, none of this is for you to educate donors on.  All we can do is advise them to seek professional advice!

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987