New Requirements for In-Kind Contributions

On September 17, 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2020-07, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. 

The new standard applies to noncash contributions including inventory, property, equipment, supplies, food, and professional services that many nonprofit organizations receive from donors.  The update does not change the accounting for these items but provides additional disclosure requirements so that the reader of the financial statements can clearly see the noncash contributions versus the cash contributions that a nonprofit receives and how the organization utilizes these noncash gifts. 

Nonprofit organizations will now be required to show in-kind contributions as a  line item on the statement of activities, separate of cash contributions.  In addition to showing in-kind contributions on a separate line from cash contributions, the new standard requires additional disclosures of in-kind contributions. 

• Type of in-kind contributions.
• Whether the in-kind contributions were used by the organization and for what program or activity, or if the contribution was monetized during the period.
• The organization’s policy about monetizing in-kind contributions rather than using them.
• Any type of donor-imposed restrictions on the in-kind contributions.
• How the fair value of the contribution was determined.

The new requirements go into effect for annual periods beginning after June 15, 2021 and for interim periods with annual periods beginning after June 15, 2022.  Early adoption is permitted.

Contributed by: Carrie Minnich, CPA, MAcct | Director | DWD CPAs & Advisors