Revenue Recognition of Grants and Contracts by Not-for-Profit Entities
Last updated on August 4, 2017. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Updated sections are indicated with an asterisk *)
The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
*Due Process Documents
Decisions Reached at Last Meeting
Tentative Board Decisions Reached to Date
Board/Other Public Meeting Dates
*Project ObjectiveThe objective of this project is to improve and clarify existing guidance on revenue recognition of grants and contracts by not-for-profit entities.
*Due Process DocumentsOn August 3, 2017, the FASB issued Proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. The due date for comment letters is November 1, 2017.
- Download the Proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made.
- Read the FASB in Focus which summarizes the Proposed Accounting Standards Update.
- Read the press release on the Proposed Accounting Standards Update.
Decisions Reached at Last Meeting (June 7, 2017)The Board discussed (1) comments from external reviewers on a draft of the proposed Accounting Standards Update on clarifying the scope and the accounting guidance in Topic 958, Not-for-Profit Entities, for contributions received and contributions made and (2) any remaining issues, including costs and benefits, and made the following decisions.
The Board decided to remove the phrase future and uncertain event from the definition of a donor-imposed condition.
The Board decided that the comment period deadline for the proposed Update should be 90 days from the issuance date of the proposed Update.
The staff will draft a proposed Accounting Standards Update for vote by written ballot.
Tentative Board Decisions Reached to Date (as of June 19, 2017)A summary of decisions reached to date can be found here.
*Next StepsThe Board will consider feedback received on the Proposed Accounting Standards Update at a future meeting.
Board/Other Public Meeting DatesThe Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
The following are links to the minutes for each meeting.
|June 7, 2017||Board Meeting—The Board continued its deliberations, focusing on the definition of a donor-imposed condition, external review comments, cost benefit analysis, and comment period.|
|April 19, 2017||Board Meeting—The Board continued its deliberations, focusing on right of return or a release of the promisor from its obligation to transfer assets, accounting from the resource provider’s perspective, disclosures, transition, and early adoption.|
|February 22, 2017||Board Meeting—Issue 2: Distinguishing Between Conditional and Unconditional Contributions|
|December 14, 2016||Board Meeting—Issue 1: Characterizing Grants and Contracts as Reciprocal or Nonreciprocal Transactions and Issue 2: Distinguishing between Conditional and Unconditional Contributions|
|August 31, 2016||Board Meeting—Issue 2: Distinguishing between Conditions and Restrictions for Nonreciprocal Transactions|
|June 15, 2016||Board Meeting—Issue 1: Characterizing Grants and Contracts as Reciprocal or Nonreciprocal Transactions|
|April 20, 2016||Board Meeting—The Board added the Revenue Recognition of Grants and Contracts by Not-for-Profit Entities project to the technical agenda|
Background InformationIssues were raised by stakeholders (including the Not-for-Profit Advisory Committee [NAC], the American Institute of Certified Public Accountants [AICPA] Expert Panels, and others) indicating that there is difficulty and diversity in practice among NFPs with the following two issues:
- Issue 1: Characterizing grants and similar contracts with government agencies and others as (i) reciprocal transactions (exchanges) or (ii) nonreciprocal transactions (contributions)
- Issue 2: Distinguishing between conditional and unconditional contributions.
Stakeholders have also expressed that there is difficulty in distinguishing between a condition and a restriction, particularly when funds are provided to an NFP with the stipulation of a certain outcome but no return policy is specified. There is also diversity in practice in determining whether the likelihood of failing to meet a condition is remote, which can change when a contribution is recognized. Overall, the diversity in both Issue 1 and Issue 2 occurs for grants and contracts from various types of funders, but government grants and contracts appear to cause the most concern among stakeholders. The conclusions can affect the timing and net asset classification of the revenue recognized in such transactions.
At its April 20, 2016 meeting, the Board voted to add this project to its technical agenda and directed the staff to pursue the approach of clarifying and improving the existing guidance. The Board also directed the staff to perform additional research on the identified issues to best address stakeholder concerns.
Contact InformationElizabeth Gagnon
Supervising Project Manager
Postgraduate Technical Assistant
Postgraduate Technical Assistant