New Standard for Nonprofit Reporting of Contributed Nonfinancial Assets
Angela Lawrence, Paraprofessional at Klatzkin, contributed to this post.
In September 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-07, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. The new standard is now in effect for annual periods beginning after June 15, 2021, and interim periods within fiscal years beginning after June 15, 2022.
The ASU increases transparency through new requirements in how nonprofits present and disclose contributions of nonfinancial assets (also referred to as gifts-in-kind) in their financial statements. Nonfinancial assets include fixed assets (such as land, buildings, and equipment), use of such fixed assets or utilities, materials and supplies, intangible assets, and services. Contributions of nonfinancial assets are now required to be presented separately from gifts of financial assets, such as cash, in the statement of activities.
New Additional Disclosures
The new additional disclosure requirements in the footnotes include:
- Noncash contributions are disaggregated by category or type; for example, donated services should be listed separately from donated clothing or food items.
- Information about whether the contributed nonfinancial assets were utilized or monetized during the reporting period. If the assets were used, the nonprofit will include a description of the program or activities in which the assets were used. If monetized, the nonprofit should include their policy, if they have one, about monetizing assets.
- Description of donor restrictions placed upon in-kind contributions, if any.
- Description of the valuation techniques and inputs used to arrive at a fair value measure, as required by Topic 820, Fair Value Measurement, at initial recognition.
- The primary market (or most advantageous one) is used to arrive at a fair value measure if it is a market in which the nonprofit is prohibited from selling or using nonfinancial assets by a donor-imposed restriction.
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