Knowledge and Insights

Nonprofit Accounting Standards Update No. 2020-07

Stick Figure Family on Data Paperwork

Does your organization receive donated goods or services? If so, accounting for these donated goods or services will be subject to new accounting guidance. In September 2020, the Financial Accounting Standards Board (FASB) released Accounting Standards Update (ASU) 2020-07, which applies to nonprofit organizations that receive contributions of nonfinancial assets, also referred to as gifts-in-kind (GIK). The ASU is effective for June 30, 2022 fiscal reporting periods on a retrospective basis, with early application permitted.

Many nonprofits utilize GIK to benchmark themselves against one other. If there is inconsistency in how organizations are reporting this information, comparison with other nonprofits will not be effective or useful. The goal of the update is to better communicate with stakeholders through additional transparency in the financial statements.

What is required?

Most of the changes will impact the disclosure requirements in the notes to the financial statements, but nonprofits will have to report GIK as a separate line item in the Statement of Activities rather than combining them with other donations. This may have to be further disaggregated by category that depicts the type of nonfinancial asset. Further, for each category of contributed nonfinancial assets recognized, nonprofits will have to disclose in the notes to the financial statements:

  • Qualitative information that addresses the organization’s policies relating to whether or not it will sell the donated assets for cash upon receipt or hold the items for future use. If they were utilized during the reporting period, a description of the program or activities in which those assets were used is required.
  • Any donor-imposed restrictions related to the use of the nonfinancial assets.
  • The valuation techniques and inputs used to determine the fair value.
  • The principal market (or most advantageous market) used to arrive at a fair value measure if it is a market in which the recipient not-for-profit is prohibited by a donor-imposed restriction from selling or using the contributed nonfinancial assets.

If you need assistance getting ready for the new ASU or have questions regarding contributed nonfinancial assets, contact me at or 609-689-2421.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.