Host a Nonprofit Fundraising Event without Getting Tangled up in Government Regulations

Host a Nonprofit Fundraising Event without Getting Tangled up in Government Regulations

by Hillary Erbert, Associate Accountant

A fundraising event is a fun way to raise money for a good cause and attract more attention to a nonprofit organization.  However, they can take a tremendous amount of hard work and financial resources to host.  In addition, the government provides extra hurdles to jump through by requiring permits and enforcing specific regulations concerning how money is reported and how taxes are paid.  It’s important for nonprofits to understand these requirements to avoid unexpected fees and circumstances that could jeopardize the success of the event.  Certain types of events that are subject to these regulations include raffles, auctions, gambling, and events that serve alcoholic beverages.

Considerations for hosting a raffle:     Tickets with numbers in a woven basket

  • The organization must register with the Attorney General’s Registry of Charitable Trusts by September 1st OR at least 60 days before the event.
  • At least 90% of the gross proceeds from the raffle must be used for charitable purposes.
  • A Nonprofit Raffle Report must be submitted by October 1 to the Attorney General the year following the raffle.
  • Prizes may need to be reported on a W-2G.

Considerations for hosting an auction:    gavel

  • A seller permit may be required.
  • Sales tax must be paid on items sold based on the auction price (not the actual value of the item).
  • A sales tax return must be filed with the BOE as soon as the last day of the month following the event.

Considerations for hosting a gaming event:    chips

  • The organization must submit the Annual Registration Form to the Bureau of Gambling Control via mail no more than 90 days and no less than 30 days prior to the proposed date.
  • Games that can be played at the event are limited.
  • Prizes to participants are limited and may need to be reported on a W-2G.

Considerations for serving alcoholic beverages:   drinks

  • The organization may need to hire a licensed caterer or obtain a 1-day license
  • The organization may need to pay tax on beverage sales

In addition, there might be more complicated revenue recognition rules that are specific to your events. DBM is here to help you identify and address those specific reporting requirements.  Ensuring your organization is prepared will save time and costs down the road.

For detailed information on all of these topics, visit our Best Practices on Nonprofit Fundraising Events.

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