FMV is used for three different purposes:
- To reflect the value of the Donor's contribution; and
- To calculate the default minimum bid and raise amounts for Silent items; and
- To determine the buyer's potential tax deduction (if the item sells for more than the stated FMV.
When adding or editing an item with quantity > 1, enter the FMV of a single item. The software will automatically extend the FMV (multiply FMV x Qty) to reflect the Donor's contribution.
If the FMV = $0, you must specify the desired minimum bid and raise amount for Silent items (the default values will be 0.01).
Tip: If the FMV is unknown when item is created, enter your best estimate. The donor receipt Fine Print contains a default message: "If you did not provide a Fair Market Value for your donation, we recorded an estimated FMV. Please let us know if our estimate was off so we can update our records and provide you with an accurate receipt."
Tip: A common approach to the tricky question of what to list as Fair Market Value (FMV) on items where someone is hosting a party, outing, activity and/or classroom projects is to base the FMV on the cost of food/materials/venue, etc. This will provide documentation so the donor(s) can claim a charitable contribution for their out of pocket expenses and buyers can claim the difference between what they paid and the FMV. These items are usually flagged to display as Priceless! to the public.
Note: For signup parties and other fixed price items, specify the FMV per person in the Item record to ensure accurate calculations for both buyers and donors (Donor records/receipts automatically reflect the extended value of FMV x quantity).