Several questions from my trainings have been about non-cash donations and how to value them. The PPC Guide to Contributions has the best guidance out there on the subject and I still highly recommend them, a worthy investment for your nonprofits financial well being.
How do we value food donations for our “Taste Of…” event?
Fair value must be determined. According to SFAS 157, Fair Value Measurements, the fair value is, “the price that would be received to sell an asset or paid transfer of liability in an orderly transaction between market participants at the measurement date. The quoted price for identical assets in an active market is the most reliable evidence.”
For this question, if a restaurant is providing you with 300 deserts, what do they sell the deserts for? If they are catering at your event, what do they normally charge for catering? Those quoted prices (or better yet and invoice) would be what you would use to value the donations.
Can the suggested starting bid on an item to be sold at auction be used as the fair value?
Yes, with exceptions. If a vendor gives you something to auction for your charity event and places a “suggested starting bid” sticker on it, that can be used. But if you have sold similar items before and what they suggest doesn’t match what you have used in the past that suggestion won’t work. Checking other resources on how the item might be valued would also be a good idea.
We have a golf tournament where everything is donated. Donors then buy tickets for the event. Is the whole ticket deductible to the those donors?
From what I can tell it is not. The non-deductible portion of the ticket represents the estimated fair market value of the goods or services received by the donor in return for the contribution. How much would the donor normally have had to pay to play golf at the location? The fact that the nonprofit did not incur any costs for the facility is irrelevant to the benefit received by the donor.
What are some resources for valuing donations?
- Association of Evangelical Relief and Development Organizations
- Determining the Value of Donated Property (IRS pub. 561)
- Salvation Army’s Donation Valuation Guide
- TurboTax ItsDeductible