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8.2 Contributions made through intermediaries
Publication date: 27 May 2020
us NFP guide
The incremental (overlay) revenue recognition guidance for intermediary, or “three-party,” contributions that involve a donor, an intermediary, and a third-party donee (recipient or beneficiary) is found in subsections of ASC 958-605, titled Transfers of Assets to a Not-for-Profit Entity or Charitable Trust That Raises or Holds Contributions for Others (referred to as the “Transfers of Assets” subsections). That guidance is incremental to the general revenue recognition guidance for contributions in the Contributions Received subsections of ASC 958-605, discussed in NP 6 and NP 7.
Figure NP 8-1 displays ASC 958-605’s three subsections and the subject matter covered by each.
Figure NP 8-1
Road map of ASC 958-605, Revenue recognition—contributions
Road map of ASC 958-605, Revenue recognition—contributions
The incremental guidance in the “Transfers of Assets” subsections (along with companion guidance in ASC 958-20, Financially-Interrelated Entities) establishes an accounting framework that (a) addresses whether the recipient entity or the third-party donee should report contribution revenue and (b) requires the third-party donee to report its rights to resources held by the intermediary as an asset. The framework’s key principles are:
- If the intermediary has discretion in determining how the transferred assets should be distributed, the transaction is outside the framework. The intermediary has received a contribution from the donor that should be accounted for under the “Contributions Received” subsections of ASC 958-605.
- If the intermediary has little or no discretion in determining how the assets transferred will be distributed:
- The intermediary acts as a conduit for passing the gift from the donor to the intended donee, and the third-party donee reports the contribution revenue.
- An exception is provided if the intermediary and third-party donee are financially interrelated organizations. In those situations, the intermediary recognizes contribution revenue, and the third-party donee recognizes an interest in the intermediary’s net assets. See NP 8.5.2 for the meaning of “financially interrelated” and the rationale underlying this accounting.
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