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09/04/07
By Tom Welsh
Like so many positive, powerful things surrounding us, DoughNation Services was inspired by one person’s experience in solving a life dilemma.
In 2002, Kim Breas had her first experience exercising some profitable stock options she obtained from Palm, which had recently acquired the small internet startup where she worked. The not-so-great thing was, she owed the IRS some serious money as a result. When faced with high tax bills, large organizations and wealthy individuals can put their accountants to work to help them avoid or reduce their taxes. But most of us, rely on more mundane means to offset income tax liability. One of the more popular methods available is making tax-deductible donations to not-for-profit organizations, either in cash, appreciated assets (think stocks or artwork, for instance), or just “stuff.” Breas had some really good stuff to donate, including a number of silk suits she knew she wouldn’t be wearing as much in the less-formal Northwest. She was unsure how to go about assessing the value of these in-kind items when it came time to fill out her tax return. What was it all worth, according to IRS regulations? She talked to a local nonprofit which specialized in donations of women’s business attire, and quickly learned that while it is illegal for the receiving organization to have any part in setting the value of donated goods (intended to prevent collusion between a not-for-profit and a potential donor intent on inflating the value of an item in order to obtain a higher tax deduction), there was software available that could tell a donor how much they legitimately could claim. She bought the inexpensive software to guide her in maximizing her potential deduction. By the time she was done, her deduction totaled just under $5,000 – about five times what Kim would have guessed on her own. Breas surmised that lots of other folks out there were faced with the same problem, and DoughNation was born; a for-profit business that takes the hassle and guesswork out of the process of donating in-kind items to not- for-profit organizations. For a fee based upon the amount of the items in question – from a minimum of three bags to a whole houseful – DoughNation values the items according to IRS guidelines and transports the items to the receiving organization. The organization gets the goods, the donor receives a justifiable tax break (which most of us, left to our own devices, tend to underestimate by as much as 90%), and DoughNation receives a service fee which is most cases is more than offset by the enhanced tax deduction. The Southeast Examiner recently asked Breas how she goes about valuing the items she encounters. “Basically, research and experience,” she responds. IRS valuation guidelines are fairly vague and broad in this regard. For example, if donated items are worth more than $500, regulations stipulate that a signed receipt must be provided to the donor by the receiving not-for- profit. Over $5,000 and an appraisal is required, but appraisals can be expensive and how is the donor to know if the thing is worth anything near that much in the first place? And that is where Brea’ business comes in. DoughNation also knows where and where not to donate certain items. For instance, Goodwill will not take king-size beds or mattresses. Who needs that kind of surprise when they have borrowed the neighbor’s pickup truck just long enough to haul the bed away? The benefits are many: landfills are leaner, not-for-profit organizations are richer, the trend toward “social enterprise” (the idea that businesses can do well by doing good and adding to our sustainability index) increases, and donors’ lives are simplified even as their pocketbooks benefit. So who are these donor/customers? Life is full of transitions, and oftens involve a need to take inventory of our stuff. A new family member, kids growing up, going back to school, home remodeling, retirement…these are just a few examples of situations causing us to jettison the no-longer- necessary goods cluttering our homes. When families lose a loved one and are confronted by the seemingly insurmountable task of dealing with a lifetime’s worth of possessions at an especially vulnerable time, Kim Breas’ experience assists her bereaved clients with a special service from DoughNation called “Gentle Disposition,” one of the three services they offer. “From our clients’ standpoint, one of the great things about working with us is that there are no surprises, except maybe the very pleasant one of learning that they will end up with quite a bit larger tax deduction than they had anticipated,” says Kim. DoughNation thoroughly assesses each client’s situation and provides an estimate of the costs of valuing, documenting, and transporting the items in question, including the cost of disposing of or recycling any non-donatable items. Under some circumstances even DoughNation’s fee itself is tax deductible as part of making a charitable donation. When Breas has finished, the “stuff” is gone and the client has all necessary tax forms, plus full documentation needed to satisfy any IRS inquiry. Thus far, DoughNation is unique to Portland, and serves only the metropolitan area, including southwest Washington. This may not be the case for long, however. About a year ago, Kim took on a partner, Lorca Harrison, who is concentrating on marketing and further developing the enterprise. Given that people all over the USA have perfectly good items that other people can make great use of, there is a lot of room to grow. There’s more to explore at DoughNation, including how to earn “DoughNation Dough” and how to inspire the “philanthropists of tomorrow” by involving the younger members of your family in giving decisions. Contact DoughNation at 503.320.8213, or reach Kim Breas via e-mail at kimbreas@doughnationservices.com. Visit her website at www.doughnationservices.com.
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