Has your development department struggled to fill tables at events or complete foursomes at the annual golf tournament? If you are like many NPO's in South Florida and across the country then you answered, yes. According to a 2009 study by the Committee Encouraging Corporate Philanthropy (CECP) companies have reduced their cash contributions by two-thirds. However, non-cash contributions such as, pro-bono professional services, office equipment, office space and other assets have increased.
Non cash gifts are valuable to both NPO's and companies. These donated goods and services would otherwise have to be purchased. According to the CECP study 96% of companies feel solving social problems is important to their business. In my experience as an auditor, the most common donations in-kind are solicited for fundraising purposes. However, the accounting for these types of transactions has been overlooked.
For example, XYZ corporation donates cruise tickets to KYM's silent auction. The tickets are recorded as contributions at fair value on the date of donation. When the cruise tickets are sold at auction, the difference between the cash received and fair value on the date of the purchase is adjusted for in the current year's earnings. In significant fundraising organizations these adjustments can be material.
Is your Organization recording these transactions properly? Make those adjustments soon, June 30 is just around the corner.
See authoritative guidance at FASB 958-605-25-2 (Not For Profit Entities-Revenue Recognition-Contributions Received). The survey can be found at: www.corporatephilanthropy.org/research
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