USA Journal entries for non profit giving away inventory as marketing

[adirondacks028]

Imagine you have a nonprofit that sometimes gives away a product to prospective donors. There is a lot of this product. It's not a product they ever sell as a source of revenue for the organization, just something to draw new and more donations. What would journal entries be starting from the purchase of it to giving away (let's say $100 inventory)? I'm using QBO but I'm not sure it's relevant at this point as I'm just trying to understand the principles.

I'm thinking: debit inventory $100, credit cash $100, then the give away would be debit marketing expense, credit inventory 100? Really struggling w/ this one.

 

[BIG E]

I would be more concerned about whether this activity is authorized in the Organization's By-Laws - under what circumstances the product is given sometimes, rather than always, to prospective donors.
If inventory is maintained, does the organization have adequate insurance to cover events that would create illwill?

 

[adirondacks028]

I would be more concerned about whether this activity is authorized in the Organization's By-Laws - under what circumstances the product is given sometimes, rather than always, to prospective donors.
If inventory is maintained, does the organization have adequate insurance to cover events that would create illwill?

Ignore the word sometimes as it's misleading. Apologies. They are always given away. Let's say it has about 1k of inventory in ten units of equal value and yes it does have insurance.

 

[BIG E]

Yes - you are correct in your journal entry thoughts -
But I must also caution you that there is a value limitation on "gifts" to a single party -
Under Internal Revenue Code Section 274(b)(1) - there's a $ 25 limit on value of promotional items per year
§274. Disallowance of certain entertainment, etc., expenses
(b) Gifts
(1) Limitation
No deduction shall be allowed under section 162 or section 212 for any expense for gifts made directly or indirectly to any individual to the extent that such expense, when added to prior expenses of the taxpayer for gifts made to such individual during the same taxable year, exceeds $25. For purposes of this section, the term "gift" means any item excludable from gross income of the recipient under section 102 which is not excludable from his gross income under any other provision of this chapter, but such term does not include-
(A) an item having a cost to the taxpayer not in excess of $4.00 on which the name of the taxpayer is clearly and permanently imprinted and which is one of a number of identical items distributed generally by the taxpayer, or