Sorry for your bad experience. I know the feeling, and it sucks. I lent a D70 with UV-pass and IR-cut filters, 100/2.8 Series E lens and a few other (expensive) accessories to a girl doing post-grad pollination biology studies, and who wanted to do UV photography of flowers. Without me knowing, she broke the camera, then her mom had it fixed but ended up spending much more to get it completely revamped to almost new condition. Then she did not want to give it back, and insisted that I sell it to her. I wanted the camera as a backup for my main UV/IR body, so I was reluctant to sell, but I had to concede or ruin a friendship. She did receive a slight admonishing, though!
Since then, I never lend something unless making the following very clear: Replacement value NEW is XX. If you break, dent, scratch or lose it, I expect you to pay that amount or buy a new one for me. You are responsible for your own insurance. I expect a replacement immediately (in the practical sense of the word, i.e. as soon as insurance pays out, the item can be ordered etc). I don't lend out items I can't live without until the replacement arrives.
I don't lend out anything with sentimental value.
Sometimes it makes sense to lend or to borrow. But one has to know to or from whom, and what the terms are. There are habitual bad borrowers, that don't bring your stuff back or repay loans until you nag, or repair your stuff they broke etc. Some of my best friends I won't lend anything to. Some people can be my friends, and at the same time have a problem with borrowing ethic. But they have their problem with their other friends, not me. I take good care of my own equipment, and better care of others'. I don't borrow something for a prolonged time, only for something specific or if I want to try out something I intend buying for myself. I don't borrow something that I cannot afford to replace immediately.
All the above said, sometimes one has too much stuff and giving away can be gratifying if the item goes to a good owner that will use it well. It is better to donate than lend such low value stuff. If one is blessed with means beyond need, then not being able to give away is a kind of pathology. I am not talking about equipment that represents a substantial investment, but the type of thing that is more hassle to sell than to just keep lying in a box on a shelf. Those of us who've been around long enough all have such things hidden somewhere. Problem is finding the right beneficiary.
EDIT: Wanted to add. If you cherish a friendship which the other party doesn't, it hardly meets the defining criteria of friendship. One doesn't have to put up with people who do not respect either yourself or your possessions as an extension of yourself.
