On February 10, 2020, the Financial Accounting Standards Board (FASB) issued a Proposed Accounting Standards Update (ASU) “Presentation and Disclosure by Not-for-Profit Entities for Contributed Nonfinancial Assets” designed to improve transparency in how not-for-profit organizations present and disclose contributed nonfinancial assets.
Also known as gifts-in-kind, 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/or recognized contributed services.
The Proposed ASU would require not-for-profit organizations 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 would also require not-for-profits to disclose:
- Contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets, and
- For each category of contributed nonfinancial assets received:
- Qualitative information about whether the contributed nonfinancial assets were or are intended to be either monetized or utilized during the reporting period and future periods. If utilized, a description of the programs or other activities in which those assets were or are intended to be used.
- A description of any donor restrictions associated with the contributed nonfinancial assets.
- The valuation techniques and inputs used to arrive at a fair value measure, including the principal market (or most advantageous market), if significant, in accordance with the requirements in Topic 820, Fair Value Measurement.
Generally accepted accounting principles currently in effect do not include specific presentation requirements for contributed nonfinancial assets or specific disclosure requirements for contributed nonfinancial assets other than contributed services.
Comments on the Proposed ASU are due to the FASB by April 10, 2020.
If you have questions about how this may affect your not-for-profit organization, please contact your local Blue & Co. Advisor.
