On February 10, 2020, the Financial Accounting Standards Board (FASB) issued Proposed Accounting Standards Update (ASU), Not-for-Profit Entities (Topic 958), which is intended to improve transparency for how not-for-profit organizations present and disclose contributed nonfinancial assets. Contributed nonfinancial assets, or gifts-in-kind, include things like land, buildings, equipment, materials, supplies, intangible assets, and services. The proposed ASU is meant to address concerns about the lack of transparency regarding the value of gifts-in-kind received by not-for-profits, as well as the amount of those contributions used in their programs and activities.
The proposed ASU would require not-for-profits that receive gifts-in-kind to present them as a separate line on the statement of activities, distinct from other types of contributions. It would also require those organizations to disclose the following:
- Contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets
- For each category of contributed nonfinancial assets received (as identified above):
- 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.
The amendments in this proposed ASU would be applied on a retrospective basis to the first set of financial statements following the effective date, which has not yet been determined. Comments on the proposed ASU are due to the FASB by April 10, 2020.
