The Nebraska Community Foundation works with community, organizational and donor-advised affiliated funds serving 250 communities located in 80 counties. NCF and its affiliated funds have reinvested $269 million in Nebraska since 1994.
Affiliated funds (AFs) planning a fundraising event should call their NCF Development Staff contact to discuss plans for the event. This allows us to make sure that all aspects of your affiliated fund’s event are in accordance with the law, prudent risk management and NCF policies and procedures.
This Fundraising Event Checklist must be completed for every event conducted by an affiliated fund of the Nebraska Community Foundation that includes fundraising elements.
Following are the key considerations for a typical fundraising event:
Insurance – There is always some risk of injury or property damage at an event. NCF has liability insurance that covers our affiliated funds, but only if we advise the insurance company of the event in advance. A Special Events Questionnaire must be completed for most events at least two weeks prior to the event, and can be obtained from the NCF Accounting department. In some circumstances, an additional premium may be charged for your event, and will be borne by your AF.
Auctions/Sales of Items for Fundraising - Items sold at auction, even for fundraising purposes, are subject to sales tax to the extent they would be subject to sales tax if sold by a retailer. Contact Les or Diane at NCF to discuss the taxability of specific items. Many fundraising auctions include both a silent auction and a live auction. Typically, lower-value items are sold at the silent auction and items with a higher value are sold at live auction.
Items sold at silent auction will be deemed to have been sold for their fair market value. As a result, there will be no charitable contribution element and the full sales price will be subject to sales tax (if the item sold is taxable). Taxable items include tangible property (including gift baskets, except when more than 50% of the total cost of the basket and its contents consists of exempt food items) and certain services. Any program, catalog, signs or other materials for your silent auction should not state a fair market value for the items, and should note that the prices include sales tax as applicable.
Items sold at a live auction sometimes sell for more than their fair market value. In these situations, the purchaser may be able to receive a charitable contribution deduction for the excess of what they pay over the fair market value of the item. You will need to know the fair market value of each item included in the live auction in order to determine whether any portion of the payment might qualify for a charitable contribution for the purchaser. In the case of donated items, the donor business is typically in the best position to tell you the fair market value of the item (note that they should include sales tax in determining the fair market value). If your AF purchases items for your auction, the purchase price (plus sales tax) will likely be the fair market value of the item unless you receive a discount that would not be available to an ordinary purchaser. Any program, catalog, signs or other materials for your silent auction should state a fair market value for the items, and should note that the prices include sales tax as applicable. For example, if your AF sells an item for $1,500 that has a fair market value (including sales tax) of $1,200, the purchaser would be eligible for a charitable contribution deduction of $300 and sales tax would be calculated based on the $1,200. If no fair market is stated for bidders at your auction, however, the full amount paid will be subject to sales tax.
Alcohol - If you wish to have alcohol at an event, it must be provided and served at a cash bar by a third party with a liquor license. No proceeds from the sale of alcohol may come to your affiliated fund. You may not pay for alcohol with affiliated fund money.
NCF staff can provide advice based on what has worked for events held by other affiliated funds, and can help you avoid problems as you plan your event. The NCF Accounting department can explain how to report the proceeds from your event in order to properly record sales tax and maximize the benefits of charitable contribution deductions that may be available to your supporters.
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