Dear Clients and Friends,

Summer 2021 is upon us! Many of us are looking forward to spending more time outside, enjoying vacations, and getting back to some “regular” routines. The Kreischer Miller Not-for-Profit Industry Team is also looking forward to our 2021 not-for-profit season! 😊

Our summer newsletter addresses one of the latest Accounting Standards Updates (ASU) impacting not-for-profit financial statements: the presentation and disclosure of contributed nonfinancial assets, or gifts-in-kind. We provide an overview of the ASU, highlighting the continued focus on transparency and accountability in not-for-profit reporting as well as the requirements for implementation.

If you have questions regarding the new presentation and disclosure requirements for gifts-in-kind, or if you have a topic suggestion for a future newsletter, please reach out to me or to any member of Kreischer Miller’s Not-for-Profit Industry Team.

Continue to stay safe and well!

Elizabeth Pilacik, Director, Audit & Accounting and Not-for-Profit Specialist

New Accounting Standard to Increase Transparency of Not-For-Profit Gifts-in-Kind

In September 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-07, Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets (ASU 2020-07). The intent of this ASU is to increase transparency of contributed nonfinancial assets (also known as gifts-in-kind) for not-for-profit entities through enhancements to presentation and disclosure.

Contributed nonfinancial assets include fixed assets, use of fixed assets, materials and supplies, intangible assets, and services. Many not-for-profits receive and use gifts-in-kind in their operations and the value of these can directly impact key metrics. The gifts can also significantly impact the financial and programmatic sustainability of the organization. If the level of these gifts decreases, the organization must decide whether to spend other resources to make up the difference or to cut back the level of its programs.

ASU 2020-07 requires the organization to present contributed nonfinancial assets as a separate line item or a separate column in the statement of activities apart from contributions of cash and other financial assets, and to disclose a disaggregation of the amount by categories of nonfinancial assets. For each category (such as legal services, items for silent auctions, donated food, etc.), information disclosed should include:

  • How the assets are utilized or monetized by selling and converting to a liquid asset (and if utilized, a description of the programs or other activities in which those assets were used),
  • The policy (if any) for monetizing rather than utilizing the contributed financial assets,
  • A description of any associated donor or grantor restrictions,
  • A description of the valuation techniques and inputs used to arrive at a fair value measure at the time of initial recognition, and
  • The principal market used to arrive at fair value measure.

For example, if a donation of a building was received, the organization would disclose whether it was utilized for operations (including whether it was used for administrative uses or a specific program) or monetized by selling it. The not-for-profit would also disclose whether the donor placed any restrictions on the donation of the building (for instance, the building is required to be used for a certain program or held for a certain number of years) and how the building was valued such as recent comparable sale prices in the real estate market of the building. Finally, the organization would disclose their policy such as “the not-for-profit’s policy is to use contributed nonfinancial assets for programmatic or other purposes unless the assets have no utility consistent with the not-for-profit’s mission. In those instances, the assets would be monetized.”

The standard is effective for annual periods beginning after June 15, 2021 (for example, fiscal years ending June 30, 2022 or December 31, 2022). Early adoption is permitted and retrospective application is required.

As always, we are here to help. Please reach out if you have any questions or would like assistance navigating and implementing this new standard.

Contact us with questions or for more information about this topic.


Information contained in this alert should not be construed as the rendering of specific accounting, tax, or other advice. Material may become outdated and anyone using this should research and update to ensure accuracy. In no event will the publisher be liable for any damages, direct, indirect, or consequential, claimed to result from use of the material contained in this alert. Readers are encouraged to consult with their advisors before making any decisions.