Why An Appraisal?

Both cash and non-cash charitable contributions are tax deductable, but non-cash donations must be appraised prior to the deductions being filed with IRS. The IRS specifies that for annual non-cash donations of less than $5000, no appraisal is needed. Fair market values assigned by the donor for these smaller donations are generally accepted.
 You are allowed to make non-cash charitable contributions equal to 50% of your annual taxable income.
 It is inappropriate ethically for the donee to provide any evaluation or appraisal of donations as it is an obvious conflict of interest. Furthermore, it is inappropriate for the donor to expect the donee to pay the appraisals fees.

 
 Notes from the Internal Revenue Service
      (from IRS Publication 561 Determining the Value of Donated Property)
 Cost of appraisals.
  You may not take a charitable contribution deduction for fees you pay for appraisals of your donated property.
  However, these fees may qualify as a miscellaneous deduction, subject to the 2% limit, on Schedule A (Form 1040) if paid to determine the amount allowable as a charitable contribution.
  
 Qualified Appraisal.
  Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get an appraisal made by a qualified appraiser and you must attach an appraisal summary to your tax return.
  
  A qualified appraisal document:
 a.relates to an appraisal made not earlier than 60 days prior to the date of contribution of the appraised property;
 b.does not involve a prohibited appraisal fee
 c.includes a description of the property including quantity and condition; date of donation and any conditions of use; the details and qualifications of the appraiser; the date(s) of the actual appraisal; a discussion of the method of determining the Fair Market Value and the total FMV of the property
 dis prepared, signed, and dated by a qualified appraiser
 
 You must receive the qualified appraisal before the due date, including extensions, of the return on which a charitable contribution deduction is first claimed for the donated property. An appraisal summary must be attached to your tax return. Generally, you do not need to attach the qualified appraisal itself, but you should keep a copy as long as it may be relevant under the tax law.
  

 Prohibited appraisal fee.
Generally, no part of the fee arrangement for a qualified appraisal can be based on a percentage of the appraised value of the property.
  
Bellamy Consulting & Appraisal 2003 - All Images and Photographs Used by Permission