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FASB Proposes Changes to Gifts-In-Kind Rules

The Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU) aimed at improving transparency around how nonprofits present and disclose contributed non-financial assets, or gifts-in-kind (GIK). Donated pharmaceuticals often garner the most attention, particularly from regulators, who have been known to take issue with how charities value pharmaceuticals sent overseas.

The issue had been on the radar of FASB’s nonprofit advisory committee (NAC), especially since a California Assembly member recently sponsored a bill which would create new accounting guidelines around this issue specific to California for nonprofits that seek contributions in California. Assembly Bill 1181 would require a noncash contribution received by a charitable organization that is restricted by the donor from being used in the United States to be valued using the fair value of the end recipient market or a reasonable estimate thereof if the end recipient market value cannot be ascertained following a reasonable inquiry.” The end recipient market is defined in the bill as “the market in the country where the noncash contribution is to be ultimately distributed.” The bill was amended to specify this requirement only for donated pharmaceuticals, medical supplies, and medical devices rather than all noncash contributions. This differs from current GAAP that require the principal market to be used. Assembly Bill 1181 passed the Assembly and Senate before being vetoed by the governor in October. It had the support of Attorney General Xavier Becerra, who has sued several charities over pharmaceutical valuations since succeeding U.S. Sen. Kamala Harris in 2017.

The proposed ASU would require nonprofits to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets. Nonprofits would be required to disclose contributed nonfinancial assets received, disaggregated by category that depicts the type of contributed nonfinancial assets. For each category of contributed nonfinancial assets received, nonprofits would have to disclose “qualitative information about whether the assets were or are intended to be either monetized or utilized during the reporting period and future periods (and, if utilized, a description of the programs or other activities in which those assets were or are intended to be used);” a description of any donor restrictions associated with the contributed assets; and, valuation techniques and inputs used to arrive at a fair value measure, including the principal market (or more advantageous market) if significant,” in accordance with the requirements in Top 820, Fair Value Measurement.”

Stakeholders are encouraged to review and provide input on the proposed update by April 10.

If you would like more information, please contact Michael Barloewen at or 844.4WINDES (844.494.6337).
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