Dear Blue Avocado,
I have organized silent auctions for a nonprofit senior center for years.
Donors used to drop off an item and receive a receipt from the center. The donor listed the donation and the value on this receipt, which they used for their tax purposes. But the center stopped this policy. We now have a room full of donated items, with the center saying I cannot hold an auction until all of them have been inventoried, as they are now center assets, and the items can only be inventoried by the CFO.
We would pay the CFO more to inventory the items than the items are worth, so the senior center wants to do away with all donations and donate items on hand to another nonprofit (like a Salvation Army). I don’t think it’s proper to get rid of items that people purposely donated to the senior center and give them to another nonprofit just to get rid of them!
Dear Blue Avocado reader,
I know how challenging running silent auctions for fundraising can be, especially when dealing with donated items that were not successfully auctioned off!
The short answer is yes, the room full of donated items should be accounted for as inventory if held from one fiscal year to the next. One suggestion to avoid the time/cost of the CFO doing inventory is for you and the CFO to set up a procedure that would allow you or someone else to perform this task.
I recommend creating a schedule of each item and its estimated market value (a quick internet search or reasonable estimate can work, as the amounts are not material from an accounting standpoint).
Once done, the CFO would review, sign off, and have the summary transaction entered as inventory to the books with your documentation as backup. Then have your final auction! Finally, follow up with your CFO to clear the inventory off the balance sheet.
Best of luck! Other Blue Avocado readers—do you have any thoughts to add? Leave them in the comments!
In case you missed it…
Monte S. Meyers, MBA, founded Shining Star Consulting, LLC in 2006. His firm has helped many dozens of nonprofit organizations improve their financial systems and processes, pass audits, create effective budgets, develop clear policies and procedures, create useful financial reports, and develop insightful financial analysis. He has over 25 years of experience working with nonprofits in the fields of accounting, budgets, financial systems and processes, and financial reporting. He serves on the board of directors for two nonprofit organizations. For fun, he loves backpacking in Yosemite and singing the tenor part in the UC Alumni Chorus.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.