GAAP Requires Nonprofits to Report In-Kind Donations on Financial Statements
Writing for HBK, Anthony Savasta explains the intricacies of Accounting Standards Update No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made.
“There is a common misconception among nonprofits that because in-kind donations are provided at little or no cost, the organization doesn’t have to report them on its financial statements. Stakeholders and other readers of the financial statements might dispute that recording these items will merely gross-up revenue and expenses with no effect on the operating results. But conversely, not recording these items can distort an NFP’s financial statements, understating the organization’s revenue and expenses, and does not allow for true comparison between similar organizations. As such, nonprofits are required to report these contributions.”—Anthony Savasta, “GAAP Requires Nonprofits to Report In-Kind Donations on Financial Statements,” February 15, 2022
