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By Amanda Newkirk, CPA Senior Accountant

Many nonprofit organizations try to raise money by holding special events such as a golf outing, a run/walk, or a gala. In connection with these events, the nonprofit organizations often receive donated non-cash items which are to be sold during an auction. When an organization receives these donated items, in theory, they should be recording the items as an asset and as a contribution at the asset's fair value on the date of donation. The fair value that is placed on an item by an organization may be difficult to obtain as these items are often unique or rare. Organizations are encouraged to use the best estimate available to them initially.

Subsequently, when a particular item is sold during the event, FASB ASC 958-605-25-20 states that any difference between the asset's initially estimated fair value and the amount ultimately received should be recognized as an adjustment to the original contribution amount. The net effect is that the total recognized contribution amount represents the actual amount received at auction for the item.

In practice, most nonprofits will not record any amounts at the time of donation and instead record the total contribution amount when the item is sold.

Following is an example: An organization plans a silent auction. Its members approach several local businesses and request contributions of items to auction. Among the items received is a gift certificate for 18-holes of golf at a local country club. The country club values the greens fee and cart rental at $75. The nonprofit organization should recognize an asset and a contribution of $75 when the gift certificate is received. The auction then takes place a month later and the winning bid for the round of golf is $100. The nonprofit organization will need to adjust the original contribution by $25 to bring the total contributions received for that asset up to $100. As an alternative, the nonprofit organization would simply record the $100 contribution at the time the cash is received.

If you have any additional questions on how to treat donated items that are eventually sold at a fundraising event, please contact your accounting professional at Blue for more information.


If you have any questions regarding the article above or any other issue affecting your not-for-profit organization please contact your Blue & Co. advisor or e-mail us at or call us at 800-717-BLUE


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