990 Schedule G: Fundraising and Gaming

Monday May 16, 2022 comments

Any accounting, business and tax advice contained in this podcast is not intended as a thorough in depth analysis of specific issues. Nor is it a substitute for forming information. Nor is it sufficient to avoid tax related penalties. If you have specific questions that you need advice for, be sure to schedule a strategy session and not solely rely on information in this podcast. 

Hey, this is Chyla Graham. We are talking today on The Nonprofit Ace Podcast about 990's specifically Schedule G, which is about fundraising and gaming. I am not familiar with gaming. So I'm not going to dig into that. But I am going to talk about some pieces about the fundraising opponent that I think people are overlooking or not paying enough attention to. And this is not just about the form. 

For me, this digs into your actual record keeping and so what I have found when I have been helping organizations prepare their 990 and we get to the Schedule G sometimes I don't know the numbers and it's not because the organization didn't have an expense. It's because of how their accounting is set up and so this for me, it's the episode I kind of just wanted to backtrack on how you were tracking your income and expenses, specifically around your fundraising and fundraising events because of this. 

So the 990 Schedule G the first piece has a section about fundraising activities and this is for if you are saying Yep, we had professional fundraising expenses, more than 15,000. So fundraising expenses of more than 15 or maybe you had fundraising income from fundraising events of more than 15,000, or you get some gaming of 15,000 or more. 

The reason this is important is because I want to separate out the idea of we did fundraising activities, aka people, we have a person on staff who's soliciting money, and we actually did a fundraiser. So this is specifically talking only about the fundraisers, we did a specific event, not that there was a person who all year round is doing something. There was a point in time, we had a gala, we had a benefit concert, we had a thing, specifically for raising funds. So not for marketing, where we happen to ask for money, not for exposure, where we happen to ask for money, the intent of this activity was to raise money. 

And the reason I say this, is because we sometimes mix things up, we say it's this and it's this and it's this. And I want to say if your intention for the event was to raise money, it's a fundraiser, if it was more about like, Oh, we're just getting to the community, and we happen to make some money. That's not a fundraiser, if that was not what we went into this activity to do. 

Number one, make that list of all of your fundraisers and decide how you are going to track it in your system. So this is one of the reasons why it's important that you have a donor database that is tracking your donor giving, that is not the same as how you track it in your accounting system. In your accounting system you just want to say how did this event do? Could we track that versus did this donor give us the thing, like maybe you can search and find that, but your accounting system is not meant to be a donor database. 

And so the reporting, this is something you're going to be doing in conjunction with one another, the fundraising team and the finance team. So in your accounting system, I would recommend that you be able to tell each of your activities. So how does each fundraiser do if you do more than one and you maybe do a class? Maybe you call it a project? Again, though, you're not saying I want to know by people who give but maybe I want to know by what is the event that we are tracking, and the fundraising team is keeping track of who gave at what event.

The reason I say this is because you want to be able to say, hey, we ran a report. And I said everything for this specific fundraiser. Could I tell that information? One of the reasons I like Schedule G is because it gets you to see on paper, how well a program or a fundraiser more accurately is doing on the sheet actually only gives you space for three so it's about one you'll see what the event type was went to and then other events, and it's going to put them in order, it's going to be like, Okay, that one is gonna be the one that brought in the most money, and then other events, whatever number. And so here, I want to point out the things that I think people should do better about tracking. 

So on the sheet, it has revenue, and it says gross receipts, less contributions. So that might sound contradictory, but it's not. Why? Because if you're thinking of contributions, it's saying like, Oh, did you do ticket sales? See, this is where you're going to have a difference of not a suggested donation, but you said, we are selling tickets for $100. Great, so we sell tickets for $100. So we sold $20,000 worth of tickets, and we got $25,000 worth of donations. 

So in total, you would have had gross receipts of 45,000. So 20,000 of tickets, 25,000 of contributions, you would then say, well, actually, those contributions, let's take that out. And we only had a gross income of 20,000, aka those ticket sales. All right. 

Now, the next part is talking about your direct expenses. So things that you can specifically identify with for this event. Here is where it gets interesting. And again, it becomes part of how are you tracking things in your accounting system? So in your accounting system, I would want to make sure could you track cash prizes, non cash prizes, and these are things they're asking rent and for staff facility costs, food and beverages, entertainment, other direct expenses, and this is why I say it's helpful if you have a project code, or maybe you use a class that you can identify these items in so that you can pull it out. 

And so here you would say okay, we said this much in prizes, cash and non cash. So cash being we gave them $500, non cash being, we gave them a trip worth $500 rent and facility costs. Did you have to get a space, food and beverage, the catering costs, entertainment, other direct mailers, swag bags, whatever it is the other direct expenses, because it's going to then show what your net income, aka Did you make any money from this event? 

And if everything you did was a contribution, then no, it shows us that negative, that you didn't make any money. And you just need to accept that you might not make money. But if you sold tickets, and you're like, wow, we sold tickets, and our tickets were not enough to cover the costs of doing all of this programming. Maybe that's something you need to reevaluate about your program. 

So if you said yes, we had tickets, and we got contributions, and we're still not able to cover our cost of the event from those ticket sales, that would be a consideration of was it a worthwhile event? Was it worth the effort that you put into it, if you're not covering your costs, you're actually dipping into what people donated to make sure that this event was successful. So that is the reason I actually really like the Schedule G. So that's part two, that's the fundraising expenses. It also does a similar section on the gaming side. But again, I'm not as familiar with gaming. So I will not speak on that. But that is one of the reasons that I really like the Schedule G and I think all organizations should utilize it. 

Even if you're saying, Okay, we didn't do 15,000 worth of total fundraising events, I would still recommend you do it. It's just so that you can be honest with yourself about do we have a way to evaluate if this event is something that we want to do again. I'm your host Chyla Graham, be sure to follow us on social media. We are CNRG accounting on social media, and subscribe wherever you are tuning in. And I'd love a review so if you can give me some feedback. What do you love about the show? What would you like to see different? I would be open to that. We're looking at some changes in the future and so be sure to give me some info.

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