Nonprofit Tax Reporting Issues to Consider with Special Events

By Kim Hunwardsen, CPA

During the past 18 months, many nonprofit organizations were forced to cancel or shift their annual fundraising events to virtual events. While these changes were operationally significant, they did not change the associated tax reporting requirements for contributions, revenues and expenditures. 

As organizations consider how to conduct these types of events in the future, it is important to ensure proper reporting requirements are considered.

Special Event Reporting

One key item to understand when tracking special event revenues and expenditures are the differences between GAAP (or “book”) and tax reporting. For GAAP purposes, all revenue and expense items related to a fundraising event are reported on the financial statements as special event revenue. For tax purposes, revenues are reported on Form 990, Part VIII either as contributions or as special event revenue. 

In addition, Form 990 Schedule G may be completed to provide additional detail on fundraising events. Nonprofit organizations should ensure that tracking systems adequately report the details for the various components of fundraising events in order to facilitate both GAAP and tax reporting requirements.

Ticket Sales for Special Events

Ticket sales are reported for both GAAP and tax purposes as special event revenue when the cost of the ticket is comparable with the benefit received (e.g. meals, entertainment, greens fees). However, if the price of the ticket includes a contribution portion (e.g. the amount paid is greater than the benefit received) the amount in excess will be treated as contribution revenue for tax purposes with the remaining amount reported as special event revenue. 

Donated Services and Use of Space

Tax reporting specifically excludes from revenues and expenditures amounts for donated services or use of facilities.

Many organizations rely on volunteers to assist with planning and hosting events. While there is significant value to the time received, the IRS excludes these amounts from tax reporting. Consider this example: a graphic designer providing five hours of time valued at $800 to a nonprofit to design posters for an upcoming gala event. For GAAP purposes, the organization will report a donation of services for $800 and a corresponding in-kind expense. For tax purposes, the $800 of donated services is not reported in contributions or expenses on the Form 990.

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