Reduction of the Fair Market Value of a Gift in Certain Cases

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Within five years after a donor makes a gift of property to an organization, the organization must revise the value of the gift in either of the following two situations:

  • The organization holds a non-qualifying security received from the same donor in the five years prior to the gift. In this case, the value of the gift must therefore be reduced by the fair market value (FMV) of the consideration paid by the organization to acquire the non-qualifying security.
  • The organization allows the same donor (or a person or a partnership not dealing at arm's length with the donor) to use one of its properties, under an agreement entered into in the five years prior to the gift, provided the gift was not used in the organization's charitable activities. In this case, the value of the gift is reduced by the FMV of the property in question. 

Where the value of a gift has been revised, the old official receipt must be replaced by a new one and the revised value of the gift, along with the other required information, must be entered on the new receipt.


For a gift of a non-qualifying security that is a share, these rules apply only if:

  • the organization is not a private foundation; and
  • the donor deals at arm's length with the organization or with each director, officer and similar official of the organization.
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