A common type of fundraising event is a banquet, typically consisting of dinner, a speaker, and entertainment. Funds can be raised at banquets through a variety of means including selling tickets, offerings, and auctions.

Because food and entertainment is provided in exchange for contributions, the “quid pro quo” contribution rules may come into effect. Whether a ministry incurs quid pro quo reporting requirements in connection with banquets where funds are raised depends on the specifics of each event. 

  • Sale of tickets. Many banquets raise funds by selling tickets. In exchange for the pur­chase of a ticket, a giver receives a meal and entertainment. The amount of the ticket price, or contribution, must be more than $75 for the quid pro quo reporting require­ments to come into effect. If the ticket price is more than $75, the ministry must provide a written statement to the giver.

Example:  A ministry sponsors a banquet for missions charging $50 per person. The fair market value of the meal is $15 per person. There is no gift acknowledgment disclosure requirement since the amount charged was less than $75. However, the amount deductible by each donor is only $35.

  • Offering at banquet. Some banquets are structured so that funds are raised not through ticket sales but through an offering taken sometime during the banquet. If an offering is taken before, during, or shortly after the meal, the offering may be considered to primarily be a payment for the meal and therefore, subject to the quid pro quo rules. However, if an offering is taken at or near the conclusion of the event, it is less likely to be subject to the quid pro quo rules since there is a more indirect relationship between the meal and the offering. The exact facts and circumstances of how and when the offering is taken and the precise communication to the participants will have an important bearing on whether the quid pro quo rules apply.

Placing a value on entertainment provided at the banquet would generally only apply if one would normally be required to pay to attend an event featuring the performer.

Example:  A ministry invites individuals to attend a missions banquet without charge. Attendees are invited to make contributions or pledges at the end of the banquet. These payments probably do not require quid pro quo reporting even if the amount given is $75 or more because there is only an indirect relationship between the meal and the gift.

  • Sponsorship of tables or the event. At some fundraising banquets, individuals or businesses may have the opportunity to sponsor tables or the event. As a result, their name may be placed in brochures or programs or at tables. If sponsorship benefits are within the guidelines of qualified sponsorship payments, unrelated business income will be avoided.

A qualified sponsorship payment is a payment made by an individual or company to a ministry, with respect to which there is no arrangement or expectation that the person will receive, from the ministry, a substantial return benefit. A substantial return benefit is a benefit other than certain uses or acknowledgments of the sponsor. Acceptable sponsorship benefits include the use or acknowledgment of the name, logo, or product lines of the sponsor’s trade or business in connection with the activities of the ministry.

Ministries must exercise care that acknowledgments of the sponsor are actually not a form of advertising. For purposes of this discussion, the term advertising means any message or other programming material which is broadcast or otherwise transmitted, published, displayed or distributed, and which promotes or markets any trade or business, or any service, facility or product. Advertising includes messages containing qualitative or comparative language, price information or other indications of savings or value, an endorsement, or an inducement to purchase, sell, or use any company, service, facility, or product. A single message that contains both advertising and an acknowledgment is advertising. This section does not apply to activities conducted by a payor on its own. See Internal Revenue Regulation 1.512.4(c)(2)(v).

In response to sponsorship payments, ministries should acknowledge the sponsorship payment in writing, describing the amount received and the corresponding benefits provided.

Example:  A ministry holds a banquet to raise funds for missions and offers table sponsorships. In exchange for a contribution of $500 per table, the church will place the name of a sponsor, generally a business, on the sponsored table and in the banquet brochure. The sponsorship meets the qualified sponsorship payment criteria. If the sponsor is a business, no acknowledgment is generally required since most businesses claim sponsorship payments as a business expense and not as a charitable contribution. If the sponsor is an individual, nonbusiness giver, a charitable gift acknowledgment should generally be provided if the ministry selected the individuals to sit at the sponsored table.

  • Donated goods or services. A ministry may include an auction, drawings, or door prizes at its banquet. Such activities often use donated goods or services to give to the winners. Goods donated by individuals or businesses are considered charitable contributions. The donation of services does not qualify as a charitable contribution. While the ministry may express appreciation to the donor of services, a charitable acknowledgment should not be provided. The ministry is required to send an acknowledgment for goods donated with a fair market value of $250 or more.

Example #1:  An individual donates products he purchased valued at $50 to a ministry for its missions banquet. The church is not required to issue an acknowledgment to the giver of the products because the fair market value of the donation is less than $250.

If the value of the donated goods is $250 or more, the ministry should issue an acknowledgment describing the goods donated and the condition of the items, the date of the donation, but without indicating a value of the donated items. (If the items donated were made by the giver, such as a quilt, the tax deduction would only be the giver’s basis in the items.)

Example #2:  A hotel donates a weekend stay at the hotel for the charity auction with a fair market value of $300. The ministry can express appreciation to the hotel but should not issue an acknowledgment showing the $300 fair market value. This is a gift-in-kind that includes services. The acknowledgment provided to the hotel should simply describe the gift of the weekend stay without stating a value. (This would be subject to the qualified sponsorship issues described above.)

  • Door prizes at banquet. A ministry may include a door prize drawing or similar give-away at their fundraising banquet. Prizes are typically donated goods or services. Prizes won by attendees would be subject to 1099-MISC reporting requirements if their fair market value were $600 or more.

Example:  A fundraising banquet attendee wins a door prize trip to Hawaii valued at $4,000. The ministry will file a form 1099-MISC reporting the value of the trip in Box 3, Other Income and send Copy B to the winner. 

  • Auction at banquet. Banquets may include a silent or live auction of donated goods or services. The quid pro quo rules may come into effect if the giver-purchaser demonstrates donative intent by paying more for the item than its fair market value. For payments of over $75 by the giver-purchaser, a ministry is obligated to advise giver-purchasers of the estimated fair market value of items so that they can claim the excess as a deduction. The organization must publish the value of the items before the auction, in order to assure the givers their tax deduction.

Example:  A ministry includes a live auction at their missions banquet to raise extra support for their missionaries. A giver purchases a pair of professional football tickets with a face value of $200 total for $350. The church should issue an acknowledgment for the purchase that includes the fair market value of the tickets. The $150 price is considered a charitable contribution for the giver-purchaser.

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.