Not-for-Profit Notebook

Practical insight and analysis on the accounting, audit and tax issues impacting not-for-profit organizations.

Nonfinancial Gifts-in-Kind: Impact of ASU Update 2020-07 On Your Nonprofit Organization

As you receive gifts-in-kind, it's important to keep these new reporting requirements in mind.

The term “gifts-in-kind” is used broadly to refer to all noncash gifts, both tangible and intangible. Tangible gifts-in-kind include contributions of items such as stock, land and supplies. Intangible gifts-in-kind include contributions of items such as advertising and other professional services. While greatly appreciated by an organization, it can be challenging to account for these gifts.

Effective for years beginning after June 15, 2021, a new accounting standard will be implemented that will create more transparency related to the presentation and disclosures for nonfinancial gifts-in-kind.

Accounting Standards Update 2020-07: Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets will require the following financial statement presentation and disclosures. As you receive gifts-in-kind during the year, it’s important to keep these new reporting requirements in mind.

  • Nonfinancial gifts-in-kind will be a separate line item in the statement of activities, apart from contributions of cash and other financial assets (e.g. stock).

  • An organization will be required to disclose its nonfinancial gifts-in-kind by category and include the following information about each category:
    • A description of the programs or activities for which the gift-in-kind was used
    • A description of any restrictions on the gift-in-kind
    • A description of how the organization valued the gift-in-kind when received
    • What market was used to arrive at the fair value measurement (e.g. sales price)
  • The organization will also be required to disclose its policy, if any, about monetizing rather than using contributed nonfinancial assets

If we can help your organization with the impact of these new reporting requirements, please reach out.