Nonprofit Accounting Basics

Planning a Fundraising Event? The Devil is in the Details!

As if planning for a fundraising event, such as a silent auction or an annual dinner, wasn’t already one of the busiest times on the calendar for a charity organization, there is the required records and correspondence that needs to be addressed to keep your organization on the up and up with IRS rules. IRS rules? I didn’t know the IRS had rules regarding my fundraising event! What do I do now? How do I comply?

Here is a short summary of some of the records and bookkeeping that fundraising generates:

  • Sponsorship donations should be evaluated to determine the components of donation vs goods and services received
  • Donated goods for an auction have to be valued at FMV as of the date of donation
  • Auction donations “sold” at the event are recorded as donations; unsold items are returned and not booked
  • Acknowledgment letters are sent to donors for items over $250
  • Ticket sales are required to disclose the donative deductible portion
  • Donations of property valued more than $5,000 has special reporting requirements

It’s fairly common knowledge that a nonprofit has to provide a written acknowledgment letter to a donor for any single contribution of $250 or more before the donor can deduct the gift. Lessor known is the responsibility of a charity to provide the value of goods and services provided in exchange for contributions of $75 or more, which is usually the case for fundraising ticket sales. A token exception exists for items of low cost given to entice donors to donate. There are more complicated rules for donation of a car, boat or airplane. And donations of items valued by a donor at more than $5,000 may trigger a requirement for the donor to obtain a qualified appraisal and complete of Form 8283, of which the charitable organization will be asked to complete Part IV.

Many of the required correspondence are for information that needs to be determined before the event occurs, such as the donative portion of a ticket sale or sponsorship contribution. Coordination between those with this knowledge and those who are organizing the fundraising event or contributions in general are vital to a smooth outcome.