Fundraisers and Tax Reporting

Fundraising events can be valuable opportunities to raise funds, engage supporters, and build community around your mission. But behind the scenes, these events can also create tax and reporting responsibilities that are important for nonprofits to understand.

We came across a recent article from Hood & Strong, which offers a helpful overview of some of the financial and tax issues organizations should keep on their radar when planning and reporting on fundraising events.

Many of these considerations are easier to address before an event takes place rather than when it’s time to prepare your Form 990. Establishing a process for collecting the right information can help your organization stay organized, communicate clearly with supporters, and make year-end reporting less complicated.

The article covers several key considerations, including:

• Financial reporting vs. tax reporting: How fundraising event revenue and expenses may be treated differently for financial statement and tax purposes.
• Form 990 and Schedule G: When fundraising activities may require additional reporting and more detailed tracking of event income and expenses.
• In-kind donations: How donated services, facilities, volunteer time, and goods can receive different treatment under GAAP and IRS rules.
• Donor deductions: Why the full cost of an event ticket may not be tax-deductible when attendees receive meals, entertainment, merchandise, or other benefits in return.
• Donor disclosures: When nonprofits may need to provide participants with information about the fair market value of the benefits they receive.
• Recordkeeping: The importance of tracking event revenue, expenses, donated goods, and attendee benefits so that information is readily available when it’s time to prepare tax filings.

Read the full article from Hood & Strong here.