If your nonprofit arts organization hosts any fundraising events (that raise more than $5,000), you will need to complete Schedule G, “Supplemental Information Regarding Fundraising or Gaming Activities,” with your annual Form 990. For reasons of tax law regarding deductibility of charitable donations that are beyond the scope of this article, the way we report the revenue and expenses associated with galas and other fundraising events on Schedule G is somewhat misaligned with how we answer the question “how much money did we make on the annual gala” from a management perspective.
Let’s sketch a sample gala’s revenues and expenses, consider that management perspective on those numbers, and then compare with how Schedule G re-arranges those same numbers.
Your art museum or orchestra hosts its annual gala at a swanky downtown hotel. Tickets are $400 per person. You have 250 guests, and during dinner, you have a paddle raise that raises $100,000. (For simplicity, we are not including in this example any table sponsorships or silent auctions that are common at these events.) Your food and beverage costs are $250 per guest, and you have additional costs for venue rental and entertainment/AV of $35,000.
Management Perspective
| Ticket Sales | $100,000 |
| Paddle Raise | $100,000 |
| Gross Revenue | $200,000 |
| Food & Beverage | $62,500 |
| Venue Rental | $10,000 |
| Entertainment | $25,000 |
| Total Expenses | $97,500 |
| Net Revenue | $102,500 |
This is how you might report the results to your Board, your development committee, and even publicly in your annual report or thank-you letters to gala attendees. And it does align with the Statement of Activities in that the bottom line here, $102,500, is the amount that your gala contributes to your net revenue on that Statement of Activities.
Schedule G Re-arrangement
| 1. Gross Revenue | $200,000 |
| 2. Less Contributions | $137,500 |
| 3. Gross Income | $62,500 |
| 6. Venue Rental | $10,000 |
| 7. Food & Beverage | $62,500 |
| 8. Entertainment | $25,000 |
| 10. Direct Expense Summary | $97,500 |
| 11. Net Income Summary | ($35,000) |
The numbers above refer to the lines in Part II of Schedule G (the 2023 version), with some lines omitted for simplicity.
The confusion introduced by Schedule G is that we must subtract the deductible amount of the gross revenue. Since our cost per attendee was $250, that means $150 of each $400 ticket is the amount that you would advise your guests to consider a tax-deductible donation to your organization. And the total amount from the paddle raise is a pure donation and entirely deductible as well. And then we subtract those expenses, leaving us with quite a different bottom line. In fact, as Schedule G would tell it, we lost money on this imaginary gala!
You would hardly want to include that bottom line in your annual report or thank-you letters, but as Form 990, Schedule G is subject to public disclosure, it’s important to understand how to read Schedule G so that you can explain it to your board and any donors or funders who may not understand what it is (and isn’t) saying about the results of your fundraising events.
