Our organization sends out sponsorship letters for our events 6 to 12 months before the event.  How do you account for the fair market value of the goods and services received for this event if you have not finalized them? 

You MUST finalize them before you can present them to potential sponsors so they can make an informed decision on whether or not to participate and at what level based on the benefits and/or the final amount which is a gift.

One place I worked for had this exact problem.  They would take a good estimate of the cost (value) and round up.  Making the value a bit larger.  Then when costs were finalized and were less than quoted the sponsor/donor often received a larger tax deduction than they originally thought.  They were pleased.  We could also go back tho those who declined and ask a second time with the better rate. The

One place I worked for had this exact problem.  They would take a good estimate of the cost (value) and round up.  Making the value a bit larger.  Then when costs were finalized and were less than quoted the sponsor/donor often received a larger tax deduction than they originally thought.  They were pleased.  We could also go back tho those who declined and ask a second time with the better rate. The

One place I worked for had this exact problem.  They would take a good estimate of the cost (value) and round up.  Making the value a bit larger.  Then when costs were finalized and were less than quoted the sponsor/donor often received a larger tax deduction than they originally thought.  They were pleased.  We could also go back tho those who declined and ask a second time with the better rate. The

One place I worked for had this exact problem.  They would take a good estimate of the cost (value) and round up.  Making the value a bit larger.  Then when costs were finalized and were less than quoted the sponsor/donor often received a larger tax deduction than they originally thought.  They were pleased.  We could also go back tho those who declined and ask a second time with the better rate. The

One place I worked for had this exact problem.  They would take a good estimate of the cost (value) and round up.  Making the value a bit larger.  Then when costs were finalized and were less than quoted the sponsor/donor often received a larger tax deduction than they originally thought.  They were pleased.  We could also go back tho those who declined and ask a second time with the better rate. The

One place I worked for had this exact problem.  They would take a good estimate of the cost (value) and round up.  Making the value a bit larger.  Then when costs were finalized and were less than quoted the sponsor/donor often received a larger tax deduction than they originally thought.  They were pleased.  We could also go back tho those who declined and ask a second time with the better rate. The

One place I worked for had this exact problem.  They would take a good estimate of the cost (value) and round up.  Making the value a bit larger.  Then when costs were finalized and were less than quoted the sponsor/donor often received a larger tax deduction than they originally thought.  They were pleased.  We could also go back tho those who declined and ask a second time with the better rate. The

One place I worked for had this exact problem.  They would take a good estimate of the cost (value) and round up.  Making the value a bit larger.  Then when costs were finalized and were less than quoted the sponsor/donor often received a larger tax deduction than they originally thought.  They were pleased.  We could also go back tho those who declined and ask a second time with the better rate. The

One place I worked for had this exact problem.  They would take a good estimate of the cost (value) and round up.  Making the value a bit larger.  Then when costs were finalized and were less than quoted the sponsor/donor often received a larger tax deduction than they originally thought.  They were pleased.  We could also go back tho those who declined and ask a second time with the better rate. The

Sorry, I never sent that -- the BB elves were having fun.

Anyway, as I was typing,  the final tax letter went out after theevent and always had the actual deductible amount.

But you do at least need to know what the benefits are in order to come up with an estimate (which is all that is needed anyway).  If you do not even know what benefits you are going to offer I would not begin soliciting sponsors.

Which costs should you consider to estimate Fair Market Value for a fundraising Dinner Dance for example?
Thank you.

You do not technically consider any costs.  Value and cost are not interchangeable in this scenario.  The IRS asks you to do your best to determine what someone in your area would pay for the experience you are giving them (excluding the fundraiser factor).  

A chicken dinner and a house band or local speaker at a Motel 6 have a lower FMVthan a 5 course lobster dinner and a popular band or national speaker at the Ritz.  You need to determine what an average person would consider a reasonable price for that experience in your area.  All the IRS expects is a reasonable estimate - nothing exact.

When do you consider cost?  You probably want to do your best to not have your costs exceed the FMV or else you are giving people more than they paid for.  The more expenses you can get donated or reduced the better.

Certain things go along with a more valuable ticket such as better flower arrangements and linens but you need to be careful that these costs do not grow too high and cut into your profit.