Most nonprofits rely on one-shot types of fundraising to supplement individual donations. Whether you have a fundraising dinner, a 5K race or a raffle, the reporting rules are more detailed on the revised Form 990. In essence, the changes required for reporting special events and gaming income are:
1) Specific information — Details are required for events or gaming activity when the gross receipts for all events or gaming exceed $15,000. For each event that had gross receipts of $5,000 or more, you must provide details broken down by event including gross receipts, charitable contributions, rent/facility costs, food expenses, and entertainment and prize offerings. Indirect expenses, such as advertising, should be reported as general fundraising expenses and not part of the special event.
2) Separate reporting – Even if a sweepstakes or raffle is part of a fundraising special event, the income and expenses attributable to the gaming activity must be tracked and reported separately
Here’s how the IRS differentiates between special events and gaming: Special events are anything that you do to raise money outside of general contributions, usually where the recipient receives a benefit. Examples are dinners, dances, races, tournaments and other similar events. Gaming includes sweepstakes, raffles, or anything dealing with a ‘chance’ to win in exchange for a donation.
Do you have questions about the classification of events or fundraising activities? Post a comment here and I’ll reply. Your question may be helpful to another non-profit entity as well.