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Special Events What You Need to Know

Special Events What You Need to Know. What is a Special Event?. Primary purpose is to raise funds other than contributions to finance an organization’s activities. Attendee / participant typically receives a direct benefit.

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Special Events What You Need to Know

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  1. Special EventsWhat You Need to Know

  2. What is a Special Event? Primary purpose is to raise funds other than contributions to finance an organization’s activities. Attendee / participant typically receives a direct benefit. Examples include dinners, dances, races, bingo, gaming activities, tournaments, and other events. Can be ongoing, major activities or peripheral / incidental to the organization’s central activities.

  3. Why is the Accounting Important? There are different reporting requirements for financial statement and tax purposes.

  4. Special Event Income Income from special events can be part “exchange transaction” and part contribution. Maintain detail of total gross income by event. Different requirements for Form 990 presentation.

  5. Special Event Expenses Costs that are directly attributable to the benefit received by the event attendee or participant (i.e. food and drink, gift items). Costs associated with promoting and conducting the event. Separately detailing these costs may be important for functional expense reporting (program vs. fund-raising).

  6. Financial Statement Requirements GAAP has different required presentations. The presentation depends on whether the special event is part of the organization’s central activities or not. If yes – then revenue and expenses must be reported at gross amounts on the Statement of Activities. If no – you have options.

  7. Financial Statement Presentation • Option 1: • Gross revenue of special events and other fund-raising activities with cost of direct benefits to donors displayed as a line item deducted from the special event revenues.

  8. Financial Statement Presentation • Option 2: • Can consider revenue from special events and other fund-raising activities as part exchange and part contribution and report the two parts separately.

  9. Financial Statement Presentation • Option 3: • Gross revenues of special events and other fund-raising activities with the cost of direct benefits to donors displayed in the same section of the Statement of Activities as are other programs, management and general, or fund-raising expenses.

  10. Examples • See Attachment B for example financial statement presentations.

  11. How Does Form 990 Differ? Income is calculated based on the retail value of the benefit received by the event attendee or participant - different than gross proceeds. Any amounts received in excess of the income (gross proceeds less income calculated) are considered contributions and should not be included in special events income. If the benefit received has a nominal or insubstantial value, then the entire amount received is considered a contribution.

  12. 2008 Form 990 • Only need to complete detail if gross revenue exceeds $15,000 from all events in that fiscal year. • Direct expenses broken out: • Cash prizes • Non-cash prizes • Rent / facility costs • Other direct expenses

  13. Bonus Material – AUCTIONS! • The nonprofit organization is responsible for making a good faith estimate of the fair market value of goods or services (value that is within a typical range is acceptable). • A deduction is available to the DONOR of an item, but it is limited to the donor’s tax basis in the property.

  14. AUCTIONS! (con’t) • Deduction is available only for the portion of the bid that exceeds the fair market value of goods or services received (PURCHASER). • Form 990 reporting becomes complex when sales price is greater than fair market value.

  15. Government Grants Recording on Form 990

  16. Contribution vs. Program Service Revenue Contribution: primary purpose is to allow the organization to provide a direct benefit or service to the public. Program service revenue: income earned by providing a government with a service, facility, or product that directly benefits that government entity rather than the public as a whole.

  17. Form 990 “The material contained in this presentation is for general information and should not be acted upon without prior professional consultation.” Line 1e – Government contributions: primary purpose is to allow the organization to provide a direct benefit or service to the public. Line 2 – Program service revenue including government fees and contracts - income earned by providing a government with a service, facility, or product that directly benefits that government entity.

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