Special Events What You Need to Know

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Special EventsWhat You Need to Know
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What is a Special Event?

• Primary purpose is to raise funds other than
  contributions to finance an organizations
  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 organizations central
  activities.

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Why is the Accounting Important?

• There are different reporting requirements for
  financial statement and tax purposes.

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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.

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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).

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Financial Statement Requirements

• GAAP has different required presentations.
• The presentation depends on whether the special
  event is part of the organizations 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.

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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.

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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.

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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.

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Examples

• See Attachment B for example financial statement
  presentations.

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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.

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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

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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 donors tax basis in the
  property.

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AUCTIONS! (cont)

• 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.

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Government Grants

• Recording on Form 990

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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.

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Form 990

• 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.