My understand of the law is that the object should be sold at
    auction or given to another non-profit.  Returning the object to
    the donor, or giving it away, is unethical and possibly illegal.
    The reason is because when the donor gave the item--he/she also
    took (or was entitled to) a tax deduction for the gift.  Giving it
    back to the donor is having cake and eating it too, basically.

    John Handley
    San Francisco