4 Bookkeeping Considerations for Fundraising Events

From charity auctions to golf tournaments to gala dinners, fundraising events are a powerful way to raise support for nonprofit causes. As a nonprofit leader, you’re likely familiar with the event planning process. But did you know that each event you host must support your nonprofit’s budgetary compliance and goals?

Bookkeeping is a crucial need in nearly every nonprofit activity, from paying the bills to hosting spectacular events. Primarily, your bookkeeping data must be reported in Form 990 to prevent losing your 501(c)(3) status. However, it’s also an essential process for effective budgeting and making the most of every fundraiser.

Let’s explore the bookkeeping considerations your nonprofit must keep in mind when hosting a fundraising event. 

  1. Detail expenses.

From the very beginning of the planning process, your fundraising event will incur several costs. Be sure to detail every expense associated with the event, such as:

  • Cash prizes, including gift certificates
  • Noncash prizes, like raffle baskets or door prizes
  • Facility costs
  • Food and drink
  • Entertainment, such as a live band or comedian
  • Event materials, like bid sheets or donation kiosks

When detailing expenses, include any in-kind donations your nonprofit receives for the event. Although these are considered revenue, they should also be considered costs your nonprofit would have incurred if it had not been for the donation. Record in-kind contributions as net zero in your books.

If your nonprofit received grant funding, tracking expenditures is an essential part of post-award grant management. Organized record keeping helps ensure that your actual and expected costs align. 

Also, remember to note any special exceptions surrounding prizes at your event. For example, auctions are considered “games of chance,” which should be recorded separately. Auction items or door prizes at an auction should not be considered part of the event’s net expenses. 

  1. Track gross and net revenues.

As your event progresses, the donations will start rolling in! Remember to track every contribution and categorize them properly. Gross revenue includes all the contributions received from your event, including:

  • Admission: Record the revenue generated from ticket sales or registration fees for your event.
  • Cash contributions: Track all donations made during your event. This should include any donations made as part of the fundraising activity (like bids during an auction) and miscellaneous gifts. For example, let’s say you add a game to your auction gala to raise more money. Even if donors don’t win an auction item, they may still participate in the additional activity or simply give on their own!
  • In-kind contributions: Wondering whether in-kind gifts count as transactions? Foundation Group’s guide to nonprofit bookkeeping gives this example: If a dealership donates a vehicle to your nonprofit, it would still be considered a transaction, even though you didn’t pay for it. You’d record the car as an in-kind donation in your books and make note of all the transaction’s details, down to the make and model of the car.

Remember to also note any quid pro quo contributions, which are payments made to your nonprofit that are partially a payment for goods and services and partially charitable donations. For example, if donors pay $80 for a gala ticket that’s valued at $30, they’ve made a quid pro quo contribution because they paid for the ticket and then some.

This information is important to note for acknowledgment purposes. Your nonprofit is required to send a disclosure statement to donors who give quid pro quo contributions of over $75. This disclosure should include the tax-deductible amount of their contribution and a good-faith estimate of the fair market value of the goods or services that the donor received. 

After tracking your gross revenue (and with the data from your expense records), your nonprofit can calculate its net revenue. Net revenue refers to your event’s income minus its expenses. This calculation reveals how much your organization benefited from the event after factoring in what it cost to host the event.

  1. Account for sponsorships.

While your fundraising event will generate revenue on its own, you may also receive support from corporate sponsors. These sponsorships help your nonprofit cover event costs, such as providing tables and chairs or a venue for the event. Ultimately, this allows your nonprofit to maximize its net revenue since you’ll receive help covering the cost of the event.

The IRS defines a non-taxable contribution from corporate sponsors as having no arrangement of expectation for substantial return benefit. This means that your nonprofit should only record sponsorships as contributions if you don’t give the following in return:

  • Advertising
  • An exclusive provider agreement
  • Goods, facilities, services, or other privileges
  • The right to use an intangible asset such as a trademark, patent, or logo of the nonprofit

According to 360MatchPro’s guide to corporate sponsorships, event support may just be one part of a company’s corporate social responsibility (CSR) strategy. Remember to make the most of these partnerships by promoting other workplace giving opportunities, such as matching gifts, during your event. Then, track these donations accordingly in your books.

  1. Hire a bookkeeper.

Every bookkeeping situation is unique, and nonprofit leaders are often so busy with their charitable missions that they don’t have the time or resources to manage their books. Hiring a professional bookkeeper can ease this burden since an expert has the experience and knowledge needed to handle bookkeeping for churches, educational charities, and various other types of nonprofits. 

Expect a nonprofit bookkeeper to fill the following roles:

A list of a nonprofit bookkeeper’s responsibilities, which are described in the text below.
  • Record transactions
  • Reconcile bank accounts
  • Provide financial statements
  • Assist with Form 1099 preparation
  • Give advice and counsel as needed

If you do choose to outsource bookkeeping for your event (and other bookkeeping needs), search for a consultant who best fits your nonprofit’s requirements. All bookkeepers should be familiar with bookkeeping software, understand state and federal rules, and have experience handling nonprofit finances. However, the most important qualification to look for is a provider who is eager to learn about your nonprofit’s unique situation and handle your books with care.

Nonprofit bookkeeping can be a difficult venture to tackle, especially amidst the chaos of event planning and fundraising. However, it’s a crucial element of nonprofit compliance and ultimately impacts your success as it equips you to budget properly and make data-driven fundraising decisions.

At the close of your fundraising event, evaluate your books to identify ways to improve your event budgeting next time. Consider any costs that could be reduced, ways to increase your fundraising revenue, and how to secure long-term corporate sponsorships. By adjusting your bookkeeping approach for your fundraising events, you’ll continually improve your strategy and see better results. 

Greg McRay

Greg is the founder and CEO of Foundation Group, one of the nation's top providers of tax and compliance services to nonprofits. Greg and his team have worked with tens of thousands of nonprofits for over 25 years, assisting them with formation of new charities, plus tax, bookkeeping, and compliance services. He is credentialed as an Enrolled Agent, the highest designation of tax specialist recognized by the Internal Revenue Service. Based in Nashville, Tennessee, Greg and company work with charities and nonprofits all across the country and worldwide.

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