Not-for-profit donation drive

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

Accounting for noncash and hard-to-value gifts

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.


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.


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, U.S. Department of Agriculture Data Products or IRS Publication 561, Determining the Value of Donated Property.


Intangible gifts-in-kind, such as contributions of advertising space in a newspaper or magazine should be measured at fair value based on the cost of purchasing a similar advertisement with the same agency. In order to be considered a contribution, the organization should have some involvement in the design, content and placement of the advertisement.

In addition, cryptocurrency has become one of the most discussed forms of intangible gifts amongst organizations. Organizations should consider implementing a gift acceptance policy for cryptocurrency, discussing the implications of processing and accepting gifts of cryptoassets, and research the requirements of financial and tax reporting. For more on accepting gifts of cryptocurrency, see our recent article, Gift acceptance: three considerations for cryptoassets.

Contributed services

Many organizations receive contributed services that assist with their program’s mission, including volunteer work, administrative tasks such as accounting, engineering or legal services, or assistance in fundraising activities. FASB ASC 958-605-25-16 requires that the fair value of these contributed services be recognized in the organization’s financial statements if the services:

  • Create or enhance a nonfinancial asset
  • Require specialized skills provided by entities or persons possessing those skills that would be purchased if they were not donated

For services that create or enhance a nonfinancial asset, the contribution should be recognized when the services are provided at the donated services’ fair value, the fair value of the asset created or the increase in fair value of the enhanced asset.

Following is an example demonstrating this concept:

  • An organization is improving the exterior of one of its facilities and receives donated (or below-market priced) engineering services to evaluate the structure of the facility.
  • The engineering services should be recognized in the organization’s financial statements as contributions along with a corresponding increase in either expenses or assets.
  • The engineer’s services require specialized skills, would have been purchased by the organization if not donated by the engineer, and will enhance the nonfinancial asset.
  • The fair value should be estimated based on the overall cost of the services, including time incurred and materials used.
  • The amount recognized for the services should be reported as an increase in the asset (if enhancing or creating an asset) or as an expense to the appropriate functional category for which the services were rendered.

Donated facilities and utilities

Organizations may receive the use of a long-lived asset, such as a facility or building, or contribution of utilities, such as electric or telephone service. The use of facilities without charge should be recognized based on the fair rental value of the facilities. The fair rental value is the amount that would be charged for a similar space that is rented under similar terms.

A majority of the time, this would come directly from the donor stating the amount of rent that is being waived. Another option for valuing the donated use of facilities would be to consider the average rental cost for similar properties within the area. With donated utilities, an organization would value that contribution using rates charged to a general consumer with similar usage.

We're here to help

Competition for contributions from the public is not a new challenge for not-for-profits, but donors are beginning to become more creative and complex with their giving strategies. Not-for-profits who have, and publicize, their gift acceptance policies as well as understand the accounting implications may set themselves apart from others.

You may also refer to the recently released FASB Accounting Standards Update (ASU) 2020-07, which clarifies accounting treatment and presentation of gifts-in-kind for not-for-profit entity financial statements.

Michael W. Wascura
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