Many Nonprofits rely on annual special events as a significant source of annual revenue to help supplement their fundraising efforts. However, accounting for these events can often be challenging.


Events may include gala dinners, golf tournaments, marathons, concerts, carnivals, sports events, auctions, casino nights, and similar events. The participants of these events are offered something of value (a meal, theater ticket, entertainment) for a sum that exceeds the costs of the benefits provided to the participants. The difference between the amount paid by the donor and the fair value of the benefit received by the donor is considered a contribution. The items of value given to the donor in this situation are referred to as “Direct Benefits to Donors.” These are the actual costs of the items and services furnished to the attendees as inducements to attend the special event (dinner, ballroom, decorations, meals, and refreshments, etc.).


When nonprofits have special events that are in part fund-raising activities and in part exchange transactions, such as fund-raising dinners, the ticket revenue from such events are divided between contributions and revenue from exchange transactions for financial reporting purposes. The exchange transaction is measured at fair value of the direct donor benefits, and the excess of the ticket price over the fair value of the direct donor benefits is the contribution portion.

In order to properly report on the activities of these events, a number of transactions need to be considered:



Number of tickets sold at the price paid by the donor. For example: The nonprofit holds a gala and patrons pay $300 to attend the dinner and 300 tickets have been sold.  If nothing is given to the donor in return, you would simply record revenue at $90,000 (300 tickets x $300.) However, the dinner costs the nonprofit $75 per person and has a fair value of $100 per person. Therefore, the contribution portion of the special event is $60,000 [300 tickets * ($300 – $100)] and the exchange portion is $30,000 (300 * $100).


Using the example above, the Costs of Direct Benefits to Donors would be $22,500 ($75 * 300 attendees). It is important to keep in mind, for most events, calculating the Costs of Direct Benefits to Donors will include more than just the cost of the meal. The costs will also include the catering, entertainment, ballroom, decorations, meals and refreshments, etc. Thus, expenses for printing tickets and posters, mailings, public relations, consultants, allocated costs for employees’ time, and other expenses incurred by the organization are reported as fund-raising expenses.

In-kind Contributions:

These are the common in-kind contributions made for special events and are frequently not recorded.

Auctioned Items:

If an item is donated to the nonprofit and auctioned off, there will be two separate transactions. The nonprofit must first determine the fair value of the donated item and then record it as an asset and contribution revenue. Once the auction is over, an increase or decrease in the value of the contribution will be made depending on how much is received from the auctioned item.

Donated services or facilities:

services or facilities donated to an organization such as catering, event venue, entertainment or others which provide a direct benefit to the donor should be included as a contribution and expensed as Costs of Direct Benefits to Donors.

Items provided to the donor:

items donated to the nonprofit and provided to the various attendees of the event such as gift bags, raffle prizes or table goodies should be recorded as contribution revenue and then expensed as Costs of Direct Benefits to Donors.


Karen Miessner is SingerLewak LLP’s Lead Nonprofit Assurance and Advisory partner and can be reached at 424.325.7272 or via email at [email protected].