FASB Proposes Improvements to Accounting for Contributed Nonfinancial Assets by Not-for-Profit Organizations

The Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU) intended to improve transparency around how not-for-profit organizations present and disclose  contributed nonfinancial assets, also known as gifts-in-kind. Examples of contributed nonfinancial assets include fixed assets such as land, buildings, and equipment; the use of fixed assets or utilities; materials and supplies, such as food, clothing, or pharmaceuticals; intangible assets; and/or recognized contributed services.

The proposed ASU would require a not-for-profit organization to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets. It would also require a not-for-profit to disclose:  

1. Contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets, and
2. For each category of contributed nonfinancial assets received (as identified in (a)):
   1. 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.
   2. A description of any donor restrictions associated with the contributed nonfinancial assets.
   3. 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.