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.
• 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.
Why is the
Accounting Important?
• There are different reporting requirements
for financial statement and tax purposes.
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.
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).
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.
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.
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.
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 fundraising expenses.
Examples
• See Attachment B for example financial
statement presentations.
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.
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
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.
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.
Government Grants
Recording on Form 990
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.
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.
“The material contained in this presentation is for general information and
should not be acted upon without prior professional consultation.”