On Monday, February 10, 2020, the Financial Accounting Standards Board (FASB) issued a Proposed Accounting Standards Update (ASU) – “Not-for-Profit Entities (Topic 958).” The update aims to improve transparency of contributed nonfinancial assets — or more commonly referred to as in-kind donations — for not-for-profits by enhancing presentation and disclosure.

a box wrapped in pink paper with a gold ribbon tied into a bow, sprinkled with heart-shaped gold confetti; image used for blog post about proposed amendments for NFP nonfinancial assets from FASB

According to the draft of the Proposed ASU for Topic 958, the provisions would require a not-for-profit to:

  1. “Present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets
  2. Disclose:
    • a) Contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets
    • b) For each category of contributed nonfinancial assets received (as identified in (a)):
      • 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, an NFP would disclose 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.”

Comments are due April 10, 2020, and after the Board considers stakeholders’ feedback on the amendments, an effective date will be decided. If accepted, the amendments will be applied retrospectively to the first set of financial statements following the effective date.

For the full proposed amendments, visit www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176174168241

To learn more about how PKF Texas serves the not-for-profit sector, visit www.PKFTexas.com/NotForProfit.