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Nonprofits, Have you Received In-Kind Donations?

July 26, 2021

ASU 2020-07 enhances presentation and disclosure requirements for nonprofits that have received contributed nonfinancial assets. Here’s what you should know.

Attention nonprofits….have you received any in-kind donations? ASU 2020-07 addresses concerns regarding the lack of transparency about how these gifts are valued and used in your Organization’s activities. We have the details below.

What is ASU 2020-07?

This standard requires nonprofit organizations to present contributed nonfinancial assets (in-kind donations) in a separate line item on the statement of activities. The amount of the contributions is detailed in the footnotes in addition to other details.

What kind of donations count as “in kind”?

In kind gifts are contributions of goods or services other than cash grants. They are reported on part VIII on form 990. In kind donations of services are a reconciling item between the financial statements and form 990. There are two types of in-kind donations:

  1. Donation of goods like equipment, inventory etc.
  2. Donation of services like use of facilities, advertising space or professional services.

What else needs to be disclosed?

  • Your organization’s policy on liquidating vs. using these contributed assets
  • If the assets were used, a description of this must be included
  • Donor-imposed restrictions, if any
  • The valuation methods and inputs used to determine fair value
  • The principal or most advantageous market utilized to calculate fair value if it is a market in which your Organization is restricted by the donor from selling or utilizing the contributed nonfinancial assets

What stays the same?

The ASU doesn’t change the way these gifts are valued and recognized.

When is it effective?

ASU 2020-07 is effective for reporting periods beginning after June 15, 2021 and interim periods starting after June 15, 2022 and should be applied retrospectively to all periods presented. Early adoption is permitted.

If you need assistance with implementing this standard, contact us.

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