Gross or net?
Last week, a very dear friend of mine emailed me with a question. She was wondering how is the right way to report to her donors and the public how much money one of her special event fundraisers had generated. Is it more transparent and appropriate to report the event’s “gross income”? Or is it more honest to report “net income”?
As I typically do, I went to the great “internet oracle” called Google and conducted a search on the question. I didn’t find anything exactly “on point,” but I did find some very interesting stuff that I think is worthy of sharing:
- Non-Profit Accounting Basic$: “Non-Profit Specific Bookkeeping & Accounting“
- American Institute on Philanthropy: “(Mis)understanding special events“
- National Resource Center: “Building Trust Through Transparency“
- IRS: “Charitable Contributions“
Getting back to the original question: “how to report special event revenue to donors” … perhaps we should try to first create a litmus test to measure “transparency related questions”. I think a transparent non-profit organization might exhibit the following traits:
- always telling the truth
- sharing all relevant fact with stakeholders
- being accurate and authentic
- being upfront and avoiding surprises
Here is what guidestar.org says about “non-profit transparency“.
Applying a “transparency test” to this question, I lean towards the conclusion that it is appropriate to share ALL relevant information about the special event. Why not tell donors that the event grossed $X and costed $Y, which resulted in net revenue of $Z?
That is just my two cents … what do you think? How does your non-profit organization report its special event revenue to donors, board volunteers and the community?
Here is to your health!Erik Anderson Owner, The Healthy Non-Profit LLC firstname.lastname@example.org http://twitter.com/#!/eanderson847 http://www.facebook.com/home.php#!/profile.php?id=1021153653 http://www.linkedin.com/in/erikanderson847