How to Value Material Items You Donate for Charity to Nonprofit Organizations

Do you you donate clothing and other items to nonprofit organizations such as The Salvation Army, Goodwill International, United Cerebral Palsy, and the Vietnam Veterans of America, just to name a few? If you do, then you know are not only cleaning out closets and freeing up valuable space in your home or garage... you're also helping these organizations help others.

And, you're not alone. An estimated twenty million Americans contribute good used clothing, furniture, automobiles, and other physical items to these nonprofit organizations.

Another benefit of this type of giving is that you may be able to deduct the value of your donation on the next income tax return you file. But you must first get a blank receipt from the organization you donate the items to. The organization itself cannot determine the values of your contributions. Therefore, you must calculate that for yourself. There is no set formula. Instead, the Internal Revenue Service (IRS) allows you to deduct the "Fair Market Value" of each item. The "Fair Market Value" can be defined as "the amount of money or the price that a buyer would pay for the item." Obviously the age and condition of each item will have an impact on its value. And, name-brand items- designer clothing must have the tags intact- will have a higher value than a generic brand item.

To help you determine the condition of an item, an item that is considered to be in "good" condition has no wear marks on it. A "fair" rating describes a donation that looks like it has been slightly used or worn. And, a "poor" rating means that an item is well-worn.

Keep in mind that the Fair Market Value will be normally be considerably less than the price you paid for the item too.