Gifts in Kind: Take Note of New Accounting Rules
Gifts in kind have played an important role in pandemic relief efforts, with more than $200 million worth of goods already contributed to help those affected by COVID-19. Giving inventory, contributing the use of fixed assets, and donating pharmaceuticals are just a few examples of ways your clients may be supporting the causes they love, especially during the giving season and over the holidays.
As you advise clients–whether businesses, individuals, or nonprofit organizations–about the reporting requirements and taxation of gifts in kind, take note of new guidance issued by the Financial Accounting Standards Board (FASB) in a recent Accounting Standards Update for the presentation and disclosure of contributed nonfinancial assets. The new standards take effect next year.
Nothing has changed about the proper way to value and recognize gifts in kind. Reporting entities, however, are now required to disclose more details about valuation and use of the donated goods and present these details more prominently, including as a separate line item in the statement of activities.
The change is part of a continuing effort to achieve more transparency in charitable giving and maintain integrity in tax-deductible transactions.