Please note: This blog is current to the date of its publication, Monday, Sept.28. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.
Some nonprofit organizations rely heavily on contributed nonfinancial assets, also known as gifts-in-kind, to support their missions. In order to increase transparency and consistency in recording and reporting these transactions, the Financial Accounting Standards Board (FASB) recently issued Accounting Standards Update (ASU) 2020-07, “Not-for-Profit Entities (Topic 958): Presentations and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets,” which expands on reporting requirements.
Nonfinancial assets can include fixed assets, the use of fixed assets or utilities, materials, supplies, intangible assets, services and unconditional promises of those assets.
Updated requirements include:
- Contributed nonfinancial assets must be presented in a separate line item in the Statement of Activities
- Recognized contributed nonfinancial assets must be disclosed by category and depicted by type
For each category of contributed nonfinancial asset, the Not-for-Profit (NFP) must disclose:
- Qualitative information about whether the contributed nonfinancial assets were monetized or utilized during the reporting period
- If utilized, a description of the programs or activities in which the assets were used
- The NFP’s policy (if any) about monetizing as opposed to utilizing contributed nonfinancial assets
- A description of any donor-imposed restrictions associated with the contributed nonfinancial assets
- A description of the valuation techniques and inputs to arrive at a fair value measure
- The principal market (or most advantageous market) used to arrive at a fair value measure if it is a market in which the recipient NFP is prohibited by a donor-imposed restriction from selling or using the contributed nonfinancial assets
This update should be applied retrospectively and is effective for annual periods beginning after June 15, 2021, and interim periods with annual periods beginning after June 15, 2022. Early adoption is permitted. For more information on or assistance with this ASU, contact the experts at SST today.
Special thanks to SST Partner Emily Cook for providing the content for this post. Click here to learn more about Emily.