Charitable Donations Of Stamp Collections

I recently came across an organization that promotes tax-deductible charitable giving of stamp collections as a means of increasing the inherent value of stamp collections when compared to auction houses and dealers.

Have you had any experience with, or knowledge of American Stamp & Coin Foundation in California? The organization evidently is a recognized 501 (c)(3) charity headed by a well-known stamp appraiser.

I ask because I happen to think charitable work that benefits society could be a wonderful goal for the dissolution of many collections as collectors cease being active, or leave behind collections to heirs.

If most collections derive for the seller only 10% to 20% of CV when sold through auctions and dealers, it would seem that a non-profit that generates funds for worthwhile charities would interest many collectors and/or their estates.

Frankly, you can never go wrong with a charitable donation to the American Philatelic Society (APS).... especially their "Stamps Teach" program. http://stamps.org/stamps-teach

If you have any questions, email Cathy Brachbill ( http://stamps.org/Contact.aspx?Id=32&ReturnTo=401 ) or call 814 933-3803 ext. 239.

Dubasso ... Yikes!

oldguy, what I'm trying to understand is the level of interest the collecting community has toward the concept of donating their collection for a charitable benefit -- if they derive for themselves a tax deduction rather than cash.
I have seen APS and other groups request collection donations that would benefit stamp collectors -- whether kids, seniors, or disabled war vets. These are all fine opportunities, but do these programs appeal to many stamp collectors?

eyeonwall, what's your point here?

Because of limits on the way deductions flow through Schedule A to your ultimate tax bill, I now realize virtually zero tax benefit from making charitable deductions so my interest in donating stamps for a tax benefit is zero. I do still make charitable contributions to a church and other organizations but it is because I know their needs and approve of their work, not because of the tax incentive.

You should be absolutely certain this "Foundation" qualifies for a contribution. The IRS is unforgiving about errors and it has been reported that large charitable contributions to new organizations materially increases the chance of an audit.

WAIT -A-MINUTE .......Let get a few things straight ,first maybe 80% of stuff donated is nothing but "Hammster bedding" it is pure junk . Yea start crying but I got experience with this stuff . First at the APS Headquarters were the donation room near the Library has a huge dumpster to deposit donations .Stuff that goes into it are old stamp newspapers, old catalogs ,USED stamp supplies and lots of picked over beat up albums with stamps glued to pages and even with tape mounted stamps .
Not at the APS but at other organizations there is the shadow people who pick thru and take what they want before it is ever displayed and put up for sale by the charity . This is a regular feature at most Charity drop off points ,I seen it a dozen times with many help- the- poor charities .
Many years ago at a REGENCY stamp auction in Chicago they had a few lots that were APS donation consignments and the firm {REGENCY} was handling them for free thru their auction . It was a 10 boxes of stuff . During the auction it was getting no bids .So feeling sorry for the firm and the staff that was handling this stuff . I bid on it and got it as the only bidder .
On my way home after the auction ,I stopped at my place of business ,which had a big trash dumpster ,I dropped off 8 boxes of material and took two home with stamps and supplies .

I cannot see this helping modest collectors much. I'd think you'd have to be in a pretty rich tax bracket, and have a collection worth a sizeable amount, before there would much interest in this. If an inheritance or estate sale only generates 10-20% CV, I doubt that you could get away counting your deduction to a charitable foundation at 100% CV. And whatever you value it at, you only get the marginal tax rate as an effective value. So if you value it at 50% of CV (which may be too high, or which might past muster for premium items), if your marginal tax rate is 35%, you will net 17.5% as the value of this as a tax writeoff. If retired, and living off social security and draws from an IRA or 401K, it is unlikely that your marginal tax rate is much higher than 10-15% (if that). At that point your net benefit drops to 7.5% or less. Better to leave it to your heirs, and see if they can get 10-20% CV out of it selling it off on ebay.

If I had a collection worth a sizable amount, I'd run this idea past an estate planner rather than ask philatelists for advice.

Basil

At our club (a 501(c)(7) organization) we got very few stamp collections donated, since we didn't offer a tax deduction. We've since created a sister organization that is a 501(c)(3) and we're flooded. We see 6-10 collections brought in each month and the bulk of them aren't worth offering by auction. People, even though they get no benefit from a tax deduction, want to donate to a charitable organization.

billsey, thanks for confirming two of my strongest gut feelings:

1) Most stamp collections are very modest in terms of financial value (most of the old albums I've purchased from auctions have been picked through by the dealer of the better "gems").
2) Many collectors might be happy to donate their collections to a worthwhile charity.




Basil, frankly, I don't know either. But it's worth looking into as I gather further input. Generally speaking, when my wife and I have donated clothing the value has never been an issue. I would think that an appraisal of stamp collection value using Scott Catalogue values should be acceptable to IRS as the basis. But that's for a tax accountant.

floortrader, I tend to agree that the 80/20 rule should be fairly accurate regarding the value of stamp collections. Question for you: Does APS provide a tax deductible valuation for contributed collections which would interest more of the 20% with better collections? Or is APS simply another place for the 80% to dump their "hammster bedding" low-value collections?

I still think that the crucial issue here is that the value of the tax write off is not the full value of what is donated, however estimated, but that value times your marginal tax rate. That is what you need to compare to what you think the collection is worth if gifted directly to your heirs.

Proposal for Consideration

Thanks to everyone who has shared your thoughts!

Reason for this thread is to get input on whether our hobby could use a true Public Charity that takes in philatelic collectibles, provides an IRS Tax Deductible Appraisal, sells the stamps and collections, and disperses the proceeds to recognized charities that are chosen by the contributors.

My current assumptions are:

1) Most collectors are offered 10% - 20% CV, if that by dealers, and consignment auction houses can generate even less after fees.

2) Not all collectors want to themselves sell their own collections, and most have no one to leave it to who is interested.

3) If the industry CV can be used for IRS tax deductible valuation (to be learned), many collectors might do as well -- or better -- by donating to a charity -- PLUS know they are helping others.

4) Most people would prefer to support a charity that actually helps people in need rather than leave their stamps to uncaring heirs.

5) I know of no not-for-profit that provides a valid tax write-off AND allows the contributor to select a worthwhile charitable cause as the recipient of their gift.

6) Proceeds could help support well-managed successful charities such as Doctors Without Borders, CARE, Save the Children, Jewish Joint Distribution Committee, Catholic Relief Services, World Vision, Salvation Army.

I hope further thoughts shared within our Forum will help determine if this concept has value. And if so help shape this into a concept that might in the end benefit both collectors and the world at large. Please keep your ideas coming! Thanks!

Basil, you are 100% correct!
And that marginal tax rate -- or the value to the tax payer -- must be predicated on the allowable market value for the collection. This should be a known within this community, APS, and estate planners. I'll nail this part down soon.

Don't forget...we are reminded to take out insurance to cover our collections. I assume this valuation is derived from Scott or Gibbons or Michel, etc. Why wouldn't these "industry" sources not be accepted by IRS?

To be determined soon!

Of somewhat academic interest to me, as "charity" here is just that, not a tax dodge, but the figure that might be suggested by an insurer - not least to boost its income - and the figure that might be accepted by tax authorities would be very different. Taxmen may not be very good at extracting money from Amazon et al, but I'm sure they could come up with a reasonable figure for the value of stamps in the average collection - somewhere between 1 and 10% in the case of Gibbons, maybe 1-30% in the case of Scott. Instead, sell things while you're alive and kicking or leave your heirs clear instructions as to value and prospective means of realising it (preferred auction houses etc).

The IRS is quite happy to accept valuations based on Scott when it is to their benefit. Those pesky common stamps in quantity can generate quite a bit of tax revenue. Fair market value is the proper way to evaluate for tax purposes as this makes allowance for condition and takes an unfair burden off the taxpayer for quantities of common and faulty stamps. Obviously catalog value will provide a larger value for the donation, in most cases.

Donations may be valued in any way the person making the donation desires. Donations under $5000 are to be valued by the contributor. Donations of $5000 and up require an independent appraisal. The organization receiving the material will acknowledge receipt if requested (some acknowledge anyway) but are not allowed to place a valuation on the donation.

When in kind donations can be effectively used to offset your tax debt, then it is a better choice than outright sale. Each situation for each individual is different.

Appraisals/valuations for insurance should rely on replacement value.

Jobi01,

But when would that be the case? The Federal estate tax and gift exemption is $5.45 million. How many of us have collections worth that much? Or are you referring to the annual gift allowance, currently $14,000. There, I suppose, I could see them happy with a valuation based on 100% of Scott CV, as stamps gifted would cross the threshold faster. But then how many people have collections worth $14,000? That number is not negligible (I would count my own modest collection having a value more than that), but common sense would lead most people planning to leave a collection to heirs to simply wait and bequeath the whole thing.

Basil