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I just started a small (and I mean small) non-profit performing arts organization. We did all of the rigamarole and got the 501(c)3, and it's up to me to keep the books (like just about everything else at this point).

Last year we had a guest performer, who ended up donating his $2,000 fee back to the organization. Actually we never wrote him a check, so it effectively was an in-kind donation (I think). Being at the very beginning stages of putting this together, I don't really know how to report this to the IRS, and can't find any quick answers to this question either by calling their 800 number or through their website. Our organization has an annual budget of no more than $9,000 at this point and has no 941 payroll expenses, if any of that is relevant. So the questions would be:

1. Since he donated his professional time & energy, is it an in-kind donation or was he just volunteering?
2. If it was an in-kind donation, do I need to report it, and if so, how?
3. If I send him a letter of thanks with the description and dollar value of his work, will he be able to deduct it, and if so, how? As a marketing/publicity expense on a Schedule C or as a charitable contribution on a Schedule A?

I'm finding it difficult to find simple, hands-on information to walk me through the bookkeeping and tax reporting demands of a non-profit. I don't mind doing the work, I just get annoyed that it's so hard to find out just what it is you're supposed to do. I bought a guide for non-profits by Nolo Press, which is usually excellent, but this information isn't too helpful, and it's a little outdated. So lastly:

3. What are some good, practical sources of information that would help me out at this early stage of trying to put the whole bookkeeping system together?

Many, many thanks...
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1. Since he donated his professional time & energy, is it an in-kind donation or was he just volunteering?

He was volunteering.

3. If I send him a letter of thanks with the description and dollar value of his work, will he be able to deduct it, ...?

No. One cannot deduct the value of personal services contributed to a charity.

3. What are some good, practical sources of information that would help me out at this early stage of trying to put the whole bookkeeping system together?

Sorry - I'm not much help here. One thing to keep in mind is that if your donation income gets to something like $25k, you'll need to start filing form 990 with the IRS (and possibly something with your state as well). It's been a while since I've worked with a non-profit, so I don't know if that 990 filing threshold is current. You might get a copy of the form and instructions to check what the current requirement is.

--Peter
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