Jennifer Leggio is auctioning off the services of five social media experts on eBay to help support the Leukemia and Lymphoma Society. It’s not exactly a new approach to fundraising for charity, but it does break a bit of new ground in that it is the first time I can recall social media experts being the focus of such an effort.
First, kudos to Jennifer and the five experts (Chris Brogan, Joseph Jaffe, Geoff Livingston, Aaron Strout, and Greg Verdino). It certainly seems to be a worthy cause and anytime members of the community engage to take part in charitable endeavors, it is admirable.
As someone who has participated in both sides of charity auctions before, I do have a couple of concerns about some of the specifics here, however. (Please note that some of what will follow may sound like tax advice, but I am not a tax professional and therefore you should not rely on anything I say for anything other than the opinions/observations that they are.)
First, it should be made clear to bidders that the full amount of their bid is not tax deductible, contrary to the impression one may get from reading the materials. I have always been advised that I can only deduct the amount in excess of the fair market value received at a charity auction. In other words, if something is valued at $1,000 and I bid $1,200, I can only deduct $200.
And therein lies the rub. These experts have naturally pegged the value of their services as considerable. This is common in charity auctions, as those who put themselves or their products up for bid want to appear to be as generous as possible. In this case, where the experts themselves accrue some marketing benefit from merely being out there (and let’s be honest, that’s always part of the charity auction process), I suspect that many of them have pegged the value at the high end of what they might be able to get in the real world for their services.
Now understand that I am not saying that any of these five fine gentleman — all of whom I respect — has fudged their numbers. In fact, I can readily believe that all have received such sums for the services offered. But is it the typical compensation they receive?
When bidding at a charity auction, there can be several motivations driving the amount of the bid. But two important ones to consider in this context are (1) am I getting a deal? or (2) how much can I deduct? Remember that the tax deduction essentially reduces the amount of capital you are committing, thus enabling you to bid higher than you might otherwise.
In short, I encourage you to consider bidding on the services of these experts to help Jennifer’s fundraising efforts. In fact, I am considering doing so myself. At the same time, I would encourage Jennifer and the experts to clarify the real tax deductible component of any bid so that donors may bid with their eyes open.