Article

Gift acceptance: Thanks for the gift! Now how do I report it?

Accounting for noncash and hard-to-value gifts

April 26, 2022 · Authored by Michael W. Wascura, Danielle Clemson

Not-for-profit organizations often receive donations in forms other than just cash. Noncash gifts may include contributed services, donated long-lived assets or facilities, and gifts-in-kind. Gifts-in-kind can range from tangible gifts, such as furniture, equipment, clothing and commodities to intangible gifts, such as advertising, patents and cryptocurrency.

Noncash gifts are inherently harder to value than cash consideration. In this article, Baker Tilly outlines the accounting implications not-for-profits should be familiar with when accepting noncash forms of donations.

Gifts-in-kind

In general, the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 958-605-30-11 states that gifts-in-kind should be measured at fair value at the time of donation, assuming the gift has a future economic benefit or service potential for the organization. In some cases, determining fair value of a donated item may be relatively simple, but for others it could require some effort from the organization when there is no readily available market. When determining fair value, organizations should follow the guidance in FASB ASC Topic 820, Fair Value Measurement, which provides a fair value framework.

Tangible

Following are a couple of examples for how to arrive at a fair value for tangible gifts-in-kind:

A not-for-profit received donated food from their local government as part of pandemic relief. To properly record these contributions, the organization should value the food based on estimated sales prices for similar items.
Your organization receives furniture for office space. Furniture can be valued using public information available for similar items, such as auction websites or catalogs.

Useful resources to assist organizations in valuating tangible gifts-in-kind include researching online prices for similar items using valuation databases created by third parties (e.g. Salvation Army’s Donation Valuation Guide,