December 11, 2020

FASB Announces New Gift-In-Kind Reporting Rules

In late September, the Financial Accounting Standards Board (FASB) published Accounting Standards Update (ASU 2020-07), Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets.  The purpose of the new standard is to provide clear guidance on how nonprofits are to report donated nonfinancial contributions, non-cash contributions, on the financial statement. Under the prior standards, there was significant concern about industry reporting inconsistencies which made it difficult to understand both the financial position and efficiency of a nonprofit. It almost made comparative analysis difficult as well. To help clients, prospects, and others, Wilson Lewis has provided a summary of key points below.

ASU 2020-07 does not make any changes to how nonprofits recognize and measure the value of nonfinancial assets, rather it changes how they are reported. It is now required that these assets be listed as a separate line item from financial and cash contributions in the statement of activities. In other words, food, supply, clothing, and service donations will all need to be listed separately. In addition, there are new footnote disclosures that need to be made, including;

• Information about whether the donations were either used or monetized during the reporting period. If used, then a description of the programs or activities where allocated is required.
• Details of the nonprofit’s policy about monetizing versus utilizing these items.
• A description of any donor-imposed restrictions.
• Information on the valuation techniques and inputs used when determining fair value.
• Details on the principal market (or most advantageous market) used to arrive at a fair value measure if it is a market in which the recipient is prohibited by restriction from selling or using the asset.

Effective Date

The changes highlighted are effective for annual reporting periods beginning after June 15, 2021, and for all interim periods within annual periods beginning after June 15, 2022. Early adoption of the changes is permitted.

Contact Us

The changes outlined in ASU 2020-07 will require Atlanta nonprofits to make several changes to how non-financial contributions are reported. If you have questions about the changes or need assistance with a compliance audit or tax issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.