Proper accounting knowledge can prevent serious errors and make your organization appear more professional to donors
Tip 1 – Be sure to state the prize and value on all event material. People are much more likely to purchase a raffle ticket if they know what they could win.
Tip 2 – The IRS has ruled that raffle tickets are not considered charitable contributions because “the opportunity to win a prize” is something of value received for the raffle payment. This makes the transaction a purchase rather than a gift. Purchases are not deductible as charitable gifts.
Tip 3 – Report raffle earnings as part of fundraising events on Form 990 Part I, 6a or b then deduct the expenses on 6c to calculate net on 6d.
For every nonprofit, the 990 is public information and is published on the internet by the IRS, the Foundation Center, Guidestar, and others. Your organization will be judged by this information. Therefore it is vital that your organization present itself well in their 990. Nonprofits must be scrupulous in their financial transparency to keep the trust of their funders.
For more great nonprofit accounting information, see you at the May 18 Sunshine Certificate in Nonprofit Management class!
Sources: Nonprofit Quarterly April 9, 2019, Michael Wyland
and IRS Form 990
Source: Dan Moroney, Robbins and Moroney CPA, PA