Laws on Nonprofit Silent Auctions

By Holly Cameron

Nonprofit organizations often organize silent auctions to raise funds. To take part in an auction, participants offer bids on specific items and the organizers sell the item to the person who bids the highest price. If the auction is silent, participants write their bids down and an auctioneer is not required. Most states require nonprofit organizations to register before soliciting charitable donations, whether by means of a silent auction or in any other way. State rules may also state that certain organizations file annual financial returns.

Sales Tax

The organizers of an auction may be liable for state sales tax on any item sold. Sales tax is levied on the market value of the item and not the price paid. Certain exemptions may apply if the state operates a charity sales tax exception. For example, the state of Texas allows charities two one-day sales per calendar year when sales tax is not collected.

Gaming Laws

State gambling laws classify many fund-raising activities, such as raffles, as gaming and strictly control such activities even when carried out by nonprofit or charitable organizations. An auction -- silent or otherwise -- is not classified as gaming and, therefore, does not have to comply with gambling regulations.

Ready to form a nonprofit? Get Started Now


If a nonprofit organization provides alcohol -- for example, as part of dinner/auction -- it must ensure that it complies with the venue’s alcohol license. Many auctions also include alcoholic beverages, such as bottles of champagne or cases of wine, in their items being auctioned. State laws may regulate the sale and display of alcoholic auction items; for example, they may require organizers to keep alcoholic drinks separate from other auction items.

Purchasers' Charitable Contributions

If you purchase an item at an auction at a price greater than the fair market value, you may claim from the IRS a charitable contribution deduction. The amount of the deduction should be calculated as the excess of the purchase price over its market value. The IRS will require a purchaser to show that he knew that he was paying more than the market value. In some cases, the organizers of an auction provide estimates of the value of items.


Anyone who donates goods for a nonprofit silent auction may claim a charitable tax deduction for making the donation. The amount that the donor can claim is not the market value of the item, but is usually the amount that he paid for the item, unless the fair market value is lower.

Ready to form a nonprofit? Get Started Now
Rules for Fundraisers for Non-Profit Organizations in Florida


Related articles

Non-Profit Requirements for Non-Cash Donations

Encouraging donations is an important part of ensuring the success of a non-profit organization. In order to avoid penalties from the Internal Revenue Service and maintain exempt status, IRS requirements must be met and can vary based on the type of gift and its value. These requirements may include a written acknowledgement from the non-profit and an appraisal of the item. In addition, special rules apply if goods or services were received from the nonprofit in exchange for the donation or if the donee gifts automobiles, planes or boats.

Can an Entertainment Company Be Non-Profit?

The formation of a nonprofit organization is governed by state law. To take full advantage of beneficial tax treatment at both the state and federal levels, however, a nonprofit needs to go beyond being organized for a reason other than pursuing profits. Whether an entertainment company meets these strict requirements depends on the type of work performed by your organization and who benefits from it.

Can Non-Profit Organizations Sell Tickets to a Concert?

Whether a nonprofit organization can sell concert tickets, or conduct any other common fundraising activities, is a something it needs to consider before embarking on the project. The primary issue its fundraising team will want to take into account before making the decision to proceed is the way that the IRS will characterize the fundraising activity in relation to the nonprofit's tax-exempt status. The organization should also determine whether state registration of the event is required.

Doing the right thing has never been easier. Nonprofit

Related articles

Non-Profit Rules for a Raffle in New Jersey

Non-profit organizations frequently organize raffles to raise funds. Conducting a raffle is, however, a form of ...

How Many Fundraisers Can a Nonprofit Hold in a Year?

In general, there is no specific legal limit on how many fundraisers that a nonprofit can hold in a year. However, ...

Non Profit Donation Rules

Nonprofits are businesses organized for a purpose other than generating profit. For that reason, the survival of a ...

Do You Need a License to Collect for Charity?

Most states regulate fundraising to protect the public, corporations and any potential donors from fraudulent ...

Browse by category
Ready to Begin? GET STARTED