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Not-for-profit organizations receive and make contributions in different forms. Most often, they are made by transferring assets (e.g., cash, investments, land, buildings, materials and supplies), providing utilities or other services, or allowing the use of facilities. Unconditional promises to give or provide any of those items in the future are also contributions, as is the forgiveness of a liability.
Because the contribution accounting model under ASC 958 is symmetrical for contributors and recipients—that is, the same recognition and measurement rules are applied by donors and donees—the discussion in this chapter applies equally to revenue recognition by recipients and expense recognition by donors. The primary sources of authoritative guidance for contribution transactions are
  • ASC 958-605, Not-for-Profit Entities: Revenue Recognition—Contributions
  • ASC 720-25, Other Expenses: Contributions Made
  • ASC 958-720, Not-for-Profit Entities: Other Expenses
Chapter 5 of AAG-NFP and Chapter 11 of AAG-HCO also provide useful context and commentary.
This chapter discusses how to distinguish contributions from other types of nonexchange transactions and provides an overview of the basic rules for recognition of contribution revenue and contribution expense. NP 7 focuses on more specialized recognition and measurement considerations related to promises to give, noncash donations, donated services, and bequests. NP 8 discusses contributions received indirectly through another party (such as a split interest agreement or an institutional fund-raising foundation), and NP 12 discusses transactions that are part exchange and part contribution.
While this chapter uses terminology commonly associated with gift transactions (i.e., “donor” and “donee”), the concepts discussed apply equally to grants that are accounted for using the contribution accounting model. The commentary in this chapter would apply to any non-exchange gift, grant, donation, or similar transaction that meets the defining characteristics of a contribution in NP 6.2. Depending on a grant’s characteristics, it might be accounted for using the contribution accounting model, or it might be accounted for as an exchange transaction. NP 12 discusses the framework for distinguishing between exchange and non-exchange transactions.
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