Photo of nonprofit volunteers unloading non cash donations from truck

Recognizing Non-Cash Donations to Your Nonprofit

In addition to cash donations, nonprofit organizations receive non-cash gifts and donations, which must be recognized in the organization’s financial statements. Generally speaking, the criteria for recognizing and accounting for non-cash donations is the same as that for cash donations: non-cash donations are measured at fair value, recognized at the time they are received and may be restricted to specific uses or time periods.

In order for a non-cash donation to be recognizable, it must have value–meaning it can be sold or used internally by the organization, including for program purposes. Non-cash donations can generally be broken down into three categories: goods, use of facilities and utilities, and services. An organization’s ability to purchase the donated goods, facilities or services at fair value on its own does not affect the recognition of a non-cash donation.

Donated Goods

Donated goods (such as clothing, furniture, inventories, and supplies) that can be used or sold by the organization at its discretion are recognized as revenue and expense (or an asset), based on the fair value of the goods received on the date of donation. Unconditional promises to give non-cash goods should be recognized as revenue and a receivable in the period the promise is made, even if the organization does not receive the goods until a future period.

Donated Use of Facilities and Utilities

Donations of the use of facilities, property, or utilities are recognized at fair value, or the fair value of the foregone rent, at the date of donation.

In the case of donated use of utilities (free rent, for example), an organization would recognize the fair value of the donated electricity or other utility as revenue and expense in the period the utilities are received and used. Similarly, if an organization receives the free use of a building to conduct its operational activities, and it is not promised the use for a specific period of time (such as a month-to-month arrangement), the organization would recognize the fair value of the donated facilities as revenue and expense for each period the free-use of the building is received and occupied.

If an organization receives an unconditional promise that allows it the free use of facilities for an identified period of time, and the donor maintains title to the assets during that time (as with a multi-year lease, for example), the entire fair market rent value of the use of facilities would be recorded as donor-restricted revenue and a receivable in the period received. The release of the restricted assets and expense would be recorded as the time restrictions are met in each subsequent period of use. If the organization enters into a lease agreement that calls for below-market rate lease payments for facilities, the difference between the fair market rent for the facilities and the stated lease payments is deemed to be the fair value of the non-cash donation.

Donated Services

Donated services are required to be recognized if they:

  1. create or enhance a non-financial asset (i.e. land, building, etc.), or
  2. would typically be purchased if not donated, require specialized skills, and are performed by individuals that possess those skills.

Donated services that do not meet either of the above criteria should not be recognized. Some examples of services that require specialized skills include services provided by attorneys, doctors, nurses, accountants, teachers, and contractors.

Donated services that meet the criteria above are recognized, at their fair value, as revenue, and as assets or expenses at the time the services are provided.

Donated services that do not meet the criteria for recognition and reporting in the organization’s financial statements still provide value to the non-profit and show support of its mission. Donations such as general volunteer hours and services that do not require specialized skills (such as administrative or office help) can be tracked and reported in a footnote to the organization’s financial statements, disclosed in its annual report, and reported in the 990.


FASB Accounting Standards Codification 958-605