Special Events Accounting

Posted on Wednesday, November 14, 2018

Many nonprofit organizations hold an annual special event to raise funds.  Often times an auction is part of the event.  Whether it be a silent auction or a live auction, various items are normally donated to the organization for the auction.  Since these items have been donated to the organization, they must be recorded as an in-kind contribution.  However, the final amount recorded may vary depending on the actual auction results.

When the initial gift is received by the organization, it should be recorded at its fair value as of the date of the gift.  For example, an organization receives 2 tickets to a baseball game valued at $50 each.  The following entry should be recorded at the time of the gift.

Inventory                                100.00 debit

In-kind Contributions                                     100.00 credit

Three weeks later the organization holds the actual event and the tickets are auctioned off for a total of $175.  The following entry should be recorded to reflect the receipt of the auction payment and to remove the item from inventory.

Cash                                        175.00 debit

Inventory                                                        100.00 credit

In-kind Contributions                                      75.00 credit

Since the tickets were originally valued at only 100.00, the contribution needs to be increased by the actual value from the auction.

If the tickets sold at auction for less than the original fair market value, let’s say $75 in total, the following entry would be recoded to reflect the receipt of the auction payment and to remove the item from inventory.

Cash                                        75.00 debit

Inventory                                                        100.00 credit

In-kind Contributions               25.00 debit

Since the tickets were originally recorded at a total of $100, the contribution needs to be adjusted to the actual fair value from the auction, thus reducing the contribution amount.

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

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