FundSvcs Community

We have a department at our College that held a silent auction. The item was purchased below fair market value. I understand that this is not considered a donation since it is below FMV, however, the "donor" thought that his money was going towards scholarships for a particular program. How do we proceed when donor intent was for a donation to a scholarship program but legally it seems it should be processed as income? Also, we didn't receive the GIK form from the donor of the auction item until after the item was purchased. Does that mean the item's FMV has to be listed for it's "purchase price" or can we use the FMV listed after the item was purchased? Thank you, Kelly -- Kelly Ball Director of Advancement Services 828.771.5807

Did they ever take ownership of the item? I don't see how they thought they were making a donation if they were bidding on an item? Did they return the item back to you?

The donative intent is one element, but it's not sufficient. In this case the donor is getting a windfall, not making a gift. If they wish to forgo the item and just make a gift they can do that, but otherwise, the intent to give isn't matched by an actual gift. The FMV should NOT be the purchase price. By virtue of its sale not in an open market, the price can't be a Fair Market value, it's the price in this restricted offering. Your should assess the value of the item based on its price on the open market, or with the guidance of a professional assessor, if necessary. On Wed, Aug 21, 2019, 3:27 PM Kelly Ball <kball@warren-wilson.edu> wrote: > We have a department at our College that held a silent auction. The item > was purchased below fair market value. I understand that this is not > considered a donation since it is below FMV, however, the "donor" thought > that his money was going towards scholarships for a particular program. How > do we proceed when donor intent was for a donation to a scholarship program > but legally it seems it should be processed as income? > > Also, we didn't receive the GIK form from the donor of the auction item > until after the item was purchased. Does that mean the item's FMV has to be > listed for it's "purchase price" or can we use the FMV listed after the > item was purchased? > > Thank you, > Kelly > > > > -- > Kelly Ball > Director of Advancement Services > 828.771.5807 > > > >

A couple thoughts. Even if the donor’s auction payment wasn’t deductible as a charitable contribution/classified as gift income, there isn’t any reason that it couldn’t—or shouldn’t—be applied to the charitable purpose, if that was what the auction was organized to support, is there? The reason that the FMV should be published prior to the bidding is that, to qualify as a charitable contribution, the donor has to intend to make a charitable contribution (per American Bar Endowment, etc.) If you publish the value of the item and the donor bids more than that amount, that indicates that the donor intended to make a charitable contribution, because the donor agreed to pay more than the item was worth. If you can’t show that the donor knew the value of the item, then you don’t know whether they intended to pay more than the item was worth, or whether they thought (albeit incorrectly) that they were getting a good deal and not paying what the item was worth. (If this is the same donor that purchased the item below its fair market value, it doesn’t matter, because not only does the donor have to intend to pay more than the value of the item, they have to actually pay more than the value of the item. But it may apply to donors who actually do pay more than the value of the item.) My US$0.02 worth; the usual disclaimers apply. Good luck! Alan Alan S. Hejnal Data Quality Manager Smithsonian Institution - Office of Advancement 600 Maryland Avenue SW, Suite 600E P.O. Box 37012, MRC 527 Washington, DC 20013-7012 •: 202-633-8754 | •: HejnalA@si.edu<mailto:HejnalA@si.edu> [SNAGHTML5cbfa34]<https://www.si.edu/> [AASP_FundSvcs_LOGO-01(040pct)(mark)] From: Advancement Services Discussion List <FUNDSVCS@LISTSERV.FUNDSVCS.ORG> On Behalf Of Kelly Ball Sent: Wednesday, August 21, 2019 3:28 PM To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG Subject: [FUNDSVCS] Auction item purchased for below FMV We have a department at our College that held a silent auction. The item was purchased below fair market value. I understand that this is not considered a donation since it is below FMV, however, the "donor" thought that his money was going towards scholarships for a particular program. How do we proceed when donor intent was for a donation to a scholarship program but legally it seems it should be processed as income? Also, we didn't receive the GIK form from the donor of the auction item until after the item was purchased. Does that mean the item's FMV has to be listed for it's "purchase price" or can we use the FMV listed after the item was purchased? Thank you, Kelly -- Kelly Ball Director of Advancement Services 828.771.5807