Transcript of Video on Auctions and the Sale of Branded Goods

In this module, we look at fundraising activities where the benefit's value is always deducted because the benefit is central to the activity; in other words, selling that benefit is the fundraising activity.

At auctions, items or services are sold to the highest bidder. If the auctioned item or service is donated, both the donor and the winning bidder make a contribution. Let's see an example.

The registered association runs a silent auction during its annual meeting. Three local residents donated handmade pottery, baked goods and housecleaning services for the auction. These donations are non-monetary contributions from the individuals. Let's see how the financial agent values the contributions: for the pottery, he gets an official estimate from an art dealer ($250); for the baked goods, he uses the retail price from a bakery ($360); and for the housecleaning, he uses the price that the self-employed cleaner normally charges for that service ($400). The winning bidders make contributions too. Each contribution is equal to the winning bid amount minus the fair market value of the item or service. So when Sara's $400 bid wins the pottery that was appraised at $250, Sara makes a $150 monetary contribution.

Another way political entities bring in contributions is by selling branded goods. The sale of branded goods is the fundraising activity, so the fair market value of the item is always deducted from the price paid to arrive at the contribution amount.

Let's say a registered party sells merchandise with the party logo through its website. If a travel mug sells for $40, and the party purchased the mug for $5, the individual who buys a mug makes a $35 contribution.

The party might also sell goods that result in a contribution of $20 or less—for example, by selling $2 pens with the party logo for $10. Even if someone buys multiple pens, the contribution is reported under anonymous contributions.

To learn more, please take a look at our other modules and resources.

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