Accounting Standards Update: Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets (“Gifts-in-Kind”)

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This document represents the view of the FASB staff. The views herein do not necessarily reflect the views of the FASB. Official positions of the FASB are determined only after extensive due process and deliberation.

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On September 17, 2020, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (Update) that increases transparency around contributed nonfinancial assets (also known as “gifts-in-kind”) received by not-for-profit (NFP) organizations—including transparency on how those assets are used and how they are valued.

Examples of contributed nonfinancial assets include fixed assets such as land, buildings, and equipment; the use of fixed assets or utilities; materials and supplies, such as food, clothing, or pharmaceuticals; intangible assets; and recognized contributed services.
Many NFPs—including smaller ones—rely on such contributions to conduct their programs and other mission-related activities.

The Update improves financial reporting by providing new presentation and disclosure requirements about contributed nonfinancial assets for NFPs. The proposed amendments do not change existing recognition and measurement requirements for those assets.
 

Why Did the FASB Issue This Update?

Subtopic 958-605, Not-for-Profit Entities—Revenue Recognition, specifies requirements for the recognition and initial measurement of contributions and disclosure requirements for contributed services. However, it does not include specific presentation requirements for contributed nonfinancial assets or specific disclosure requirements for contributed nonfinancial assets other than contributed services.

Stakeholders raised concerns about an NFP’s reporting of gifts-in-kind, specifically contributed nonfinancial assets. Some stakeholders expressed concerns about the lack of transparency for contributed nonfinancial assets, specifically the amount of contributed nonfinancial assets received and used in an NFP’s programs and other activities. Other stakeholders expressed concerns about the clarity of certain aspects of the valuation guidance in Topic 820, Fair Value Measurement, regarding certain contributed nonfinancial assets.

The amendments in this Update respond to those concerns by providing more transparency about the measurement of contributed nonfinancial assets recognized by NFPs, as well as the amount of those contributions used in an NFP’s programs and other activities.
 

What Are the Main Provisions in the Update?

The Update requires an NFP to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets.
It also requires an NFP to disclose:  

1. A disaggregation of the amount of contributed nonfinancial assets recognized within the statement of activities by category that depicts the type of contributed nonfinancial assets.
2. For each category of contributed nonfinancial assets recognized (as identified in (a)):
   1. Qualitative information about whether the contributed nonfinancial assets were either monetized or utilized during the reporting period. If utilized, a description of the programs or other activities in which those assets were used.
   2. The NFP’s policy (if any) about monetizing rather than utilizing contributed nonfinancial assets.
   3. A description of any donor-imposed restrictions associated with the contributed nonfinancial assets.
   4. A description of the valuation techniques and inputs used to arrive at a fair value measure, in accordance with the requirements in Topic 820, Fair Value Measurement, at initial recognition.
   5. 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. 

How Should the Amendments Be Applied and When Will They Be Effective?

The amendments in this Update should be applied on a retrospective basis and are effective for annual periods beginning after June 15, 2021, and interim periods with annual periods beginning after June 15, 2022. Early adoption is permitted.