Case Studies in Not-for-Profit Accounting and Auditing

Chapter 11 FUNDRAISING EVENTS AND MEMBERSHIP

LEARNING OBJECTIVES

After completing this chapter, you should be able to do the following:

• Determine how certain resource inflows stemming from a fundraising event should be reported as contributions or exchange transactions.
• Identify how membership dues should be reported.

TECHNICAL BACKGROUND INFORMATION

Almost all not-for-profits conduct some type of fundraising event. We have all been invited to some type of bake sale, spaghetti supper, concert, annual gala, and more and more. These events are vital to not-for-profits as they seek to acquire resources in support of their mission and also build a sense of community among the supporters of the not-for-profit. These events also create accounting questions surrounding the event including the following:

• Is the event part of the organization's ongoing major or central activities (revenues), or is the event peripheral or incidental to the entity (gains)?
• If membership fees or dues are associated with the event, is the associated revenue stream a contribution or exchange transaction?
• If the event involves the attendee receiving a benefit, (meal, concert, token, and more) is part of the event an exchange transaction?
• How should the costs of putting on the event be treated?
• The auditor or accounting professional must exercise professional judgment in distinguishing contributions from exchange transactions. In the technical background for this chapter focuses on determining whether ...