Non-profit organizations provide an invaluable service to people and companies looking to donate personal property and building materials that they no longer want or cannot use. Many of these items being salvaged and reused would otherwise end up in landfills which are overburdened already with materials that will not decompose within our lifetime and beyond. By reusing materials and items, nonprofits provide economic stimulus to their communities while minimizing the negative environmental impact of landfill usage.
People who are new to the donation process may not be aware of how the industry operates. In that respect, they may rely on nonprofits when charitable donation questions arise, especially as it relates to IRS tax deductible charitable non-monetary donations. When a non-monetary charitable donation value exceeds $5,000, an appraisal is warranted by the government for 501 c tax deduction purposes. Many times, nonprofits have a list of appraisal companies with whom they routinely work and recommend to individuals, and that is a great service to donors. However, if the recommendations are not properly vetted by the nonprofits then it does not serve the best interests of the public.
Stories of fraudulent appraisal companies run rampant in industry circles. Unethical appraisers, and the companies they work for, have little trouble inflating donation values for the donors; however, that practice can backfire when it comes to tax time. The IRS can audit individuals and corporations when inflation issues raise a red flag, or for any other reason, putting their non-monetary contribution under review, as well. Due diligence should be performed before nonprofits enter into a relationship with any appraisal company. Failing to do so may not only hurt the donors but the reputation of the nonprofit as well.
Thought should also be given to vetting the qualifications and experience of the various personal property appraisers vying for business recommendations. Prior to 2018, specific education requirements were not in place, allowing almost anyone to take on the title of appraiser without much specialized training at all. It is a sad fact that some appraisers may not be completely honest about their relevant background experience. Before recommending an appraiser to a potential donor, nonprofits should do their homework by asking the following questions:
- Does the appraiser belong to one of the three most common professional personal property organizations? There are other organizations but these are the three most common for deconstruction appraiser membership. The Appraisers Association of America (AAA), The International Society of Appraisers (ISA), and The American Society of Appraisers (ASA) each provide a search tool via their websites where nonprofits can verify the appraiser is in fact a professional member in good standing.
- If they are not a member of the AAA, ISA, or ASA that sponsor The Appraisal Foundation, why not? Does the organization to which they belong as members have verifiable ethical policies and require USPAP compliance?
- What is the appraiser’s educational background? What level of post-secondary education have they completed? What courses have been completed and exams passed that would qualify them to complete personal property appraisals? ISA, AAA, and ASA require coursework with exams, continuing education, and requalification requirements making it a little easier to verify the appraiser’s education and experience. However, if they are a member of a different organization or none at all, do they have certificates of completion to verify their education?
- Is the appraiser experienced to value the specific materials or personal property being donated? For example, art appraisers are not qualified to value building materials nor the reverse; ask questions to verify the appraiser is competent in the appropriate field of appraisal services.
We at The Green Mission, Inc. encourage all nonprofits to ask questions before recommending appraisers to their customers. Even though nonprofits may be used to working with the same appraisers year after year because they are comfortable with them or because they know how they work and do not want to take the time to vet a newer appraisal company, it is important to provide donors with ethical and expert choices for professional appraisal services. In order to provide the donor with the most accurate, conservative and ethical appraisal services, it is worth the time to advise donors responsibly.
