Jitasa Nonprofit Blog

6 Tips for Making Accounting for Your Special Event Easier

The holiday season and New Year bring lots of reasons to celebrate. However, if your upcoming special event has you tearing your hair out, these tips could save you some time in the long run.

1.  Know if the funds you’re raising are restricted or unrestricted

Knowing this key factor will be the difference between being able to use any raised monies straightaway and having to wait until certain requirements are met.

  • If you’re fundraising event is conducted to fund a program, or event (a camping trip for example) that will occur sometime in the future, then these funds are restricted. They can only be used on that program or that camping trip.
  • If however, your special fundraising event is meant to raise generic funds, this money will be unrestricted and available as you need it.

Knowing the difference from the beginning will save you some headache when you report it to your accountant or the IRS.

2.   Know exactly how many tickets you’ve sold

You’ll need this info for your IRS 990 Form, so remove the guess work and make sure you have an accurate count at the time your event takes place. Keep in mind, this is a reflection of tickets sold as opposed to actual attendees.

3.   Know your direct costs

Your direct costs will need to be broken down on your IRS 990 form. They include, cash and non-cash prizes awarded at the event, all facility costs (rent, etc.), food and beverage costs, entertainment costs, all other direct expenses.

4.  Know the retail value of your ticket price

Your donors cannot consider the entire cost of their ticket a contribution. This is because they are receiving a benefit in return, whether it’s attending a fancy gala, a nice dinner, or a chance to see a great band. For this reason you must determine the “retail value” of your tickets.

  • For example, if you have Gordon Ramsey preparing dinner for your gala at no cost, your retail value would not be zero, despite the fact that Gordon has graciously donated his talents free of charge. Instead, your retail value would have to reflect what someone would normally pay for that five star experience in his restaurant.

Once you’ve determined a retail value, the math is simple. You deduct the retail value from your ticket price, and the remaining amount is considered a contribution. So, if you are charging $200 per ticket and the retail value is determined at $150, then those that purchase a ticket do so at a $50 contribution to your organization.

5. Let your donors know how much they’re contributing

Save your donors some time and headache when they file their taxes by providing the above information to them in some form.

  • For example, a statement could read “the retail value of this event is $20. Any amount paid above $20 is considered a charitable contribution; consult your tax advisor concerning yearend tax deductions.”

In addition, you should provide donors a receipt so they may adequately document their gift.

6.  Having an auction? Know how to value donations for the donor

If your donor purchases something at your auction, their contribution amount is similar to their ticket price contribution.

  • For example let’s say I buy a string of pearls valued at $2,000 from your auction. I’m passionate about your mission, so I happily pay $4,000 for them. Despite my generosity, I am only allowed to consider $2,000 a contribution. That is the difference between the value and the amount I paid.

Renata Poe Massie, Content Creator for Jitasa

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