What Event Organizers Should Know About Nonprofit Accounting

Organizing a nonprofit event involves many moving parts. Between finding a venue, securing sponsors, and driving registrations, you specialize in managing logistics and turning a to-do list into a transformative experience for your community.

However, it can be helpful to understand other areas of your organization’s operations. That way, you can communicate more effectively and work better as a team.

Namely, you should know some of the basics of nonprofit accounting relating to events so you can collaborate seamlessly with accounting staff members to plan and track your event’s finances. Check out this roundup of what event organizers should know about nonprofit accounting to build a better understanding of your role in your organization’s financial management.

1. How to Create a Proper Event Budget

Your nonprofit’s annual budget is one of its most important financial documents. It allows your organization to plan expenses, allocate resources, and monitor its activities throughout the year.

The same goes for your event itself but on a smaller scale. Developing an event budget helps you make financial decisions based on your capacity to fulfill them, ensuring you have sufficient resources to cover your event expenses.

Your budget should project your:

• Revenue. Your event’s revenue refers to all the funds you generate through your event. Potential revenue sources include ticket sales, sponsorships, merchandise sales, and donations.
• Expenses. You’ll also record the expenses you expect to incur while planning your event. For example, you’ll likely set aside funds for a venue, catering, promotional materials, and staff time. You might also have event-specific expenses, such as paying speakers if you’re holding a conference or purchasing bidding software if you’re hosting an auction.

Remember to request estimates from all external vendors to factor these expenses into your budget as accurately as possible. It’s best to overestimate your expenses to ensure you can comfortably cover them.

2. How to Maintain Financial Records

While it’s your accounting staff’s job to compile nonprofit financial statements, keeping accurate financial records related to your event can streamline this process. Additionally, maintaining these records allows you to monitor how well you stick to your budget.

Track and record all financial transactions via:

• Income records. These may include ticket sales records that show the number of tickets sold and total revenue generated, sponsorship agreements with associated terms and payment schedules, and logs of all event-related donations.
• Expense records. Hold onto vendor invoices, payment receipts, service contracts, and event staff payroll records to keep track of your event expenses.
• Bank records. It will also be helpful to have bank statements with event-related expenses on hand so you can verify the accuracy of your internal financial records.

Keeping these documents in one place allows you to easily access them and share them with the appropriate stakeholders. Consider using a digital filing system to organize this information properly.

3. How to Reimburse Expenses

Along the way, your team or volunteers may incur expenses on your organization’s behalf. For example, a staff member may purchase a graphic design subscription to create promotional materials. In these situations, you should know how to reimburse these purchases.

YPTC’s nonprofit financial management guide explains that your organization should already have an expense reimbursement policy in place for these scenarios. This policy should include the following elements to help you navigate the reimbursement process:

• The types of expenses that your organization can reimburse
• The process for submitting reimbursement requests
• The documentation needed to support reimbursement requests
• The method and timeline for processing and issuing reimbursements

If your nonprofit has an expense reimbursement policy, ensure you can access it and share it with the rest of your event team. If your organization doesn’t currently have this type of policy, check in with leadership to see if it’s on their radar and encourage them to develop one to make this process easier.

4. How to Handle In-Kind Donations

Imagine you’re hosting an auction. You decide to offer raffle baskets to give attendees more chances to bring a coveted item home and generate more funds for your nonprofit. Sponsors, local businesses, and community members donate these baskets, allowing your organization to allocate the resources it would’ve spent on them to other event areas.

These raffle baskets are a form of in-kind contributions—nonfinancial donations of goods or services—and how you handle them is slightly different from monetary donations.

While your accountant will be responsible for recording and reporting these contributions, it can be helpful to understand the process so you can provide them with the proper information:

1. Determine the item’s fair market value (FMV). Fair market value (FMV) is the price you would pay for a good or service on the open market. You can help your accountant with this step by immediately recording the FMV of an item when you receive it. For items without straightforward FMV, reach out to the item’s provider, and verify their estimate by researching comparable items’ pricing online. Lastly, you can calculate the value of service donations based on how much providers typically charge for similar projects or by multiplying their hourly rate by how many hours they’ve dedicated to your event.
2. Record the contribution. Then, your accountant will record the in-kind donation in a separate revenue account within your organization’s chart of accounts. By providing them with the FMV of each item ahead of time, you can simplify this step for them.
3. Send the item’s donor a written acknowledgment. This acknowledgment allows in-kind donors to deduct contributions of $250 or more from their taxes. Work with your accounting staff to assemble these letters and send them to the corresponding donors.
4. Report the gift on Form 990. Lastly, your accountant will report in-kind donations on Form 990 as part of your nonprofit’s revenue for the year. Help your accountant identify any items that require additional paperwork, such as items worth over $25,000, historical artifacts or artwork, and donations worth $500 or more, like vehicles.

Collaborating with your accounting staff to record and report in-kind donations can provide them with context and information that expedites the process while giving your team a look into the nonprofit accounting function.

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Every lead needs a strong supporting actor. When you understand the basic elements of nonprofit accounting and how your role as an event organizer fits into those pieces, you can effectively assist your accounting staff in managing your event’s finances and producing accurate financial records that help maintain your nonprofit’s overall financial health and stability.