Considerations when Determining Fair Market Value

Fair market value is the value assigned to a benefit based on what the benefit would be reasonably sold for in today’s market; this is not actual costs incurred. When determining fair market value (FMV) for a return benefit there are several concepts to consider:

1. While it is important to understand the actual costs of the return benefit, FMV focuses on the value the sponsor is receiving. For the types of return benefits in the Appendix: Job Aid for Sponsorships for University-Hosted Events/Activities, FMV should always be more than the actual costs of the return benefit. In determining FMV for return benefits, look at the various components of what make up the return benefit.
2. Determination of FMV is important. IRS guidelines state that certain return benefits are not tax deductible, and must be deducted from the charitable receipt or are not gift-eligible.
3. The FMV should be similar to prices others have paid for something comparable. The FMV should be a reasonable value for today’s market.
4. Determine the scope and scale of each return benefit when determining FMV. In doing so, the size of the event should be taken into consideration, along with the audience and categories of return benefits. This helps identify the value of the return benefit. For example,
   1. How many people will be attending the event?
      1. Name and logo in a program - how many people see the program?
      2. Name and logo on screen upon entering room - how many people see the screen?
   2. Access to students during the exhibit fair.
      1. How many students will be attending?
   3. UM1840 (docx) is a sample gift eligible sponsorship form and includes examples of gift eligible sponsorships. All return benefits, except name and logo recognition, for gift-eligible sponsorships should be assigned a FMV.
   4. UM1841 (docx) is a sample non-gift eligible sponsorship form and includes examples of non-gift eligible sponsorships. All return benefits for non-gift eligible sponsorships should be assigned a FMV.

Example A: Name or logo in all event media and signage and dinner seating for 10 guests (1 table) are return benefits for one of the sponsorship packages for an event. The sponsorship package is $1,000 and is gift eligible.

• Determined FMV of dinner seating at $40 per person X 10 = $400. UMF provided charitable receipt = $600.

Example B: Name or logo in all event media, signage, and audio/visual during event and dinner seating for 20 guests (2 tables), are return benefits for one of the sponsorship packages for an event. The sponsorship package is $1,500 and is gift eligible.

• Determined FMV of dinner seating at $40 per person X 20 = $800. UMF provided charitable receipt = $700.

Example C: Name or logo in all event media and signage, an exhibit table (10X10) and dinner seating for 20 guests (2 tables) is a return benefit for one of the sponsorship packages for an event. The sponsorship package is $7,500. Event participants can choose one of the sponsorship levels or forgo being a sponsor and just be an exhibitor and pay for an exhibit table (10X10) only. The price for an exhibit table only is $5,000 and is non-gift eligible.

• FMV $1,500 name or logo in all event media and signage
• FMV $5,000 exhibit table
• FMV $50 per person X 20 = $1,000

Example D: An exhibit table (10x10) will be part of a sponsorship package and as a standalone option to be an exhibitor only. A FMV rate needs to be determined for the exhibit table.

• In looking at other events that are similar in size and venue, an exhibit table is priced at $4,500. It is anticipated that 10 exhibit-only tables ($45,000) will be sold for the event. Based on the overall estimates and revenue goals of the event, the target goal for exhibit tables is $50,000. Therefore the exhibit table FMV was set at $5,000.