In our new weekly column, consultants with decades of nonprofit experience answer your questions about fundraising, boards, strategy and more. To ask a question and be featured (anonymously!) in the column, email your questions to email@example.com.
This week’s question will be answered by Amy Funk.
We received funds recently as a beneficiary for a student art auction. How do I acknowledge the checks we received from the winning bidders? The art was made by students and there’s no clear value for it, but since they did receive something in exchange for their donation, is it tax-deductible? Should we send them thank-you letters as we normally would?
In-kind gifts can be tricky, but a good rule of thumb is to only list the actual value of an item when you are able to be exact.
For example, with an auction item that is brand new, you would send a thank you note that reads, “Thank you so much for your winning bid of $1,000.00 for the Platinum Necklace (valued at $500.00)."
In this case, however, you cannot assign a value – so the letter should simply reference the item itself. Your letter can simply state, “Thank you so much for your winning bid of $75.00 for the 5th Grade Painting.” Donors can assign values for the items when they file their taxes.
The same holds true if you are the recipient of donated items. For example, with a donated item that is new: “Thank you for your donation of a couch for our Teen Room (valued at $750.00).” For items that are used, or for services in kind, you can simply list the item that was donated: “Thank you for your gift of office furniture.”
It's a great sign that you have the kind of community support and awareness that people choose to support your organization with events like these. Keep up the good work!