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can pay all the expenses and the donor contributes an equivalent amount.
Alternative is for the donor to keep track of all the expenses, pay them and then the school to issue a receipt for a gift in kind.
In this case it's important to establish boundaries as to what can be covered and also ensure that the donor knows in advance that certain types of "expenses" such as the contribution of their time cannot be receipted. This often creates additional work and can also lead to undesired negotiations after the fact with donors.
The first alternative is typically the best although in certain cases, depending on what the event is, there may be expenses that need to be included that are not allowed by institutional policy.