FASB Issues Exposure Draft Regarding Contributed Non-Financial Assets for Not-for-Profits

In February 2020, the FASB proposed an update to improve generally accepted accounting principles (GAAP) by increasing the transparency of contributed non-financial assets for not-for-profit (NFP) entities through enhancements to presentation and disclosure. Comments to the draft are requested by April 10, 2020.

The term non-financial asset (or in-kind donation) includes fixed assets, use of fixed assets or utilities, materials and supplies, intangible assets, services, and unconditional promises of those assets.  Many NFP entities have contributed non-financial assets to help further their mission and operations.

The proposal would require a NFP to:

  • Present contributed non-financial assets as a separate line on the statement of activities.
  • Disclose contributed non-financial assets disaggregated by categories.
  • For each category contributed, disclose qualitative information about whether the contributed non-financial assets were or are intended to be monetized or utilized during the reporting period and/or future periods. If utilized, a NFP would disclose a description of the programs or activities in which the assets were or intended to be used.
  • Disclose descriptions of any donor restrictions associated with the non-financial asset.
  • Valuate techniques and inputs used to arrive at a fair value measurement which would be disclosed in accordance with Topic 820, Fair Value Measurement.

The proposed changes would not change the recognition and measurement requirements as specified by current GAAP.  Current GAAP does not include specific presentation requirements or specific disclosure requirements for contributed non-financial assets, other than contributed services.  This proposal from FASB would enhance those areas.

The FASB is looking for responses in various areas, such as: the amount of time to adopt the amendments, whether the presentation and disclosure requirements should be applied to all categories or just specific ones, and if more guidance is needed regarding valuation of contributed non-financial assets.

The FASB is requesting comments by April 10, 2020, which can be submitted in three ways:

  1. The electronic feedback form on the FASB website
  2. Emailing comments to [email protected]
  3. Sending a letter to “Technical Director, File Reference No. 2020-100, FASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116.”

Sax’s Not-for-Profit Practice will continue to keep you updated as updates emerge.  For questions or more information, please feel free to reach out to a Sax advisor at (973) 472-6250.

April Kushner, CPA is a Senior Manager at Sax and a member of the firm’s Not-for-Profit Practice. She specializes in accounting and auditing services for not-for-profit organizations, including internal control consulting, federal and state grant compliance, and single audit requirements and procedures. She can be reached at [email protected].