In September 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-07, Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets, which provided additional guidance on how not-for-profit organizations should record and disclose in-kind contributions received. The update was issued to increase the transparency of contributed nonfinancial assets for not-for-profit entities through enhanced presentation and disclosure.
In-kind contributions, or contributed non-financial assets, can be items such as fixed assets (land, buildings, and equipment), food or clothing donations, materials and supplies, or contributed services. Terms typically used by not-for-profit organization to present contributed nonfinancial assets are gifts, donations, grants, gifts-in-kind, donated services, or other terms. In-kind contributions can be an important source of revenue for not-for-profits, especially during times of economic recession, as these donated items may be central to your organization's mission or can assist in alleviating certain programmatic and mission driven activity expenses.
ASU 2020-07 requires not-for-profits to present in-kind contributions as a separate line item in the Statement of Activities, separate from contributions of cash and other financial assets. In addition, additional disclosures will be required including the following:
ASU 2020-07 should be applied retrospectively, and will be effective for annual periods beginning after June 30, 2021, and for interim periods within annual periods beginning after June 15, 2022. Early adoption is also permitted.
Citrin Cooperman remains committed to ensuring we do our part to keep you up-to-date on the latest information available. Please reach out to your dedicated Citrin Cooperman Not-for-Profit Practice team at any time, as we are ready and able to assist you and your organization in further understanding the impact of the new standard, or with any other audit, tax or advisory needs.