Recording Non-charitable revenue

Tioga Anderson

Hello,

At my organization we have several events where people can purchase things like raffle tickets where no percentage of the money received is considered a charitable contribution. We currently enter it like a gift (if we know who the money was from) and then just make the benefit amount the same as the gift amount, resulting in a $0 tax deductible value. This is what has been done before I got here. I'm thinking there is probably a better way to do this. Curious how other organizations handle these types of transactions.

Thanks!

Faith Murray

@Tioga Anderson, your method is not a bad one. Other options are to enter the gift with a $0 value and dollar value in a “fair market value” attribute"; or to enter full gift amount but mark the gift “do not post”; or to record the purchase in the event registrant record but not the constituent's main “Gift” tab … it really all depends on your fundraising philosophy and bookkeeping integrations.

To the donor, your method makes total sense. You can send a tax summary at year's end, and the donor will clearly see their full giving and what portion is tax-deductible. You also get a clear view of a donor's total financial investment in your org.

Some nonprofits, however, rightly assert that event “purchases” do not behave the same as regular charitable donations when it comes to calculating donor lifetime value, philanthropic interests, mission affinity, etc; and that a registrant who purchased $10,000 worth of goods over their lifetime should not get the same recognition as a donor that selflessly donated $10,000 without receiving benefit. For this reason, many nonprofits feel that purchases should not be recorded at full dollar value in the constituent “Gifts” tab along with true donations. They will still want to record it in the registrant record or as a $0 gift, so that they are able to keep some account of it and view a donor's activity/recency.

Still other nonprofits have bookkeeping systems where their Finance Office does not want purchases or non-donations being entered through Raiser's Edge. For these situations, the “do not post” or $0 gift value entry come in handy.

If your current system sits fine with your fundraising philosophy and bookkeeping needs, I would not see a reason to change things. I might just suggest coding those gifts with some type of Gift Code, Sub-type, or attribute, so that you can easily filter them out of specific reports down the road.