Understanding Fair Market Value (FMV)

Fair Market Value (FMV) is a key setting on every item, and it does three jobs at once: it reflects the donor's contribution, it sets the default bidding parameters for Silent items, and it determines what buyers can claim as a tax deduction. Because FMV touches donor receipts, buyer taxes, and bidding all at once, it's worth understanding how to set it correctly.

What FMV is used for

FMV serves three purposes:

  1. To reflect the value of the Donor's contribution; and
  2. To calculate the default minimum bid and raise amounts for Silent items; and
  3. To determine the buyer's potential tax deduction (if the item sells for more than the stated FMV.)

Entering FMV for items with multiple quantities

When adding or editing an item with a quantity greater than 1, enter the FMV for a single item only. The software automatically extends the FMV (FMV × quantity) to reflect the donor's total contribution

If FMV is $0

If the FMV is set to $0, you must manually specify the minimum bid and raise amount for Silent items. Otherwise, these will default to $0.01.

Tips for setting FMV

If FMV is unknown when the item is created: Enter your best estimate. The donor receipt's Fine Print includes a default disclaimer: "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."

For parties, outings, activities, or classroom projects: A common approach is to base the FMV on the cost of food, materials, venue, or similar expenses. This gives the donor documentation to claim a charitable contribution for their out-of-pocket costs, and gives buyers a basis to claim the difference between what they paid and the FMV. These items are usually flagged to display as "Priceless!" to the public.

For signup parties and other fixed-price items: Specify the FMV per person in the item record. This ensures accurate calculations for both buyers and donors — donor records and receipts automatically reflect the extended value (FMV × quantity).