By Michael Hill, Staff Accountant at Blue & Co.

ASU 2020-07 Update – September 2025

Background

In September 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-07, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. The purpose of this update was to improve transparency around the measurement and use of contributed nonfinancial assets received by not-for-profit organizations (NFPs). As of September 2025, the core requirements of ASU 2020-07 remain unchanged. However, implementation practices have matured, and additional clarifications have been issued to support consistent application across the sector. These clarifications are now widely adopted and considered best practice under U.S. GAAP.

Disclosure Requirements

ASU 2020-07 requires NFPs to disclose the amount of contributed nonfinancial assets recognized by category in the notes to financial statements. For each category, the following disclosures must be made:

• Contributed nonfinancial assets must be presented separately from financial contributions.
• Disaggregation should depict the type of asset (e.g., food, clothing, medical supplies, services).
• Utilization vs. Monetization: Whether the assets were monetized or used during the reporting period. If used, describe the programs or activities in which they were utilized.
• Monetization Policy: The organization’s policy (if any) regarding monetizing contributed nonfinancial assets.
• Imposed Restrictions: Any restrictions associated with the assets.
• Valuation Techniques and Inputs: Description of the techniques and inputs used to determine fair value at initial recognition. If donor restrictions prohibit sale or use in the principal market, disclose the most advantageous market used for valuation.

Clarifications and Implementation Insights (2023–2025)

Recent guidance has clarified several aspects of ASU 2020-07, which are now considered best practices:

• Expanded Examples: Nonfinancial assets now explicitly include cryptocurrencies, auction items, and free or reduced rent.
• Disclosure Format: Both tabular and narrative formats are acceptable. ASC 958-605-55-70V provides sample formats.
• Fair Value Measurement: Disclosure of valuation techniques and inputs is required at initial recognition, even if assets are not subsequently remeasured.
• Donor-Imposed Restrictions: Must disclose any restrictions that affect the use or sale of the asset. If the principal market is restricted, the most advantageous market must be disclosed.

Sample Disclosures

Narrative Format: 

For the year ended December 31, 20XX, the Organization recognized contributed nonfinancial assets separately from other revenue and financial assets, in accordance with ASU 2020-07. These assets included a contributed building, vehicles, household goods, food, medical supplies, pharmaceuticals, clothing, and services.

Unless otherwise noted, contributed nonfinancial assets did not have donor-imposed restrictions.

The Organization’s policy is to sell all contributed vehicles immediately upon receipt at auction or for salvage unless the vehicle is restricted for use in a specific program by the donor. No vehicles received during the period were restricted for use. All vehicles were sold and valued based on the actual cash proceeds received upon disposition.

The contributed building will be used for general and administrative activities. In valuing the contributed building, which is located in Metropolitan Area B, the Organization estimated fair value based on recent comparable sales prices in the local real estate market.

Contributed household goods, food, medical supplies, pharmaceuticals, and clothing were utilized in various program services, including community outreach and health initiatives. These items were valued using market prices for similar goods in the principal market at the time of donation.

Contributed services were used in program delivery and administrative support. These services were recognized based on the fair value of the services provided, using standard billing rates for similar services in the Organization’s geographic area.

Tabular Format:

Impact and Purpose

These disclosures provide stakeholders with a clearer understanding of:

• The NFP’s reliance on nonfinancial contributions.
• How these assets are used in fulfilling the mission.
• The valuation process and transparency in financial reporting.

Need help implementing ASU 2020-07 or enhancing your not-for-profit’s financial disclosures? Contact your local Blue & Co. advisor for expert guidance and support.