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GAAP For Non-Profits › Specific Financial Statement Items

Contributed Materials and Services

Many non-profit organizations benefit from the efforts of persons and organizations who donate services and materials.

A non-profit organization may choose to recognize the fair value of these services and materials, provided these materials and services are used in the normal course of operations; they would have otherwise been purchased; and their fair value can be reasonably estimated. Where materials are part of a capital construction project, they would have to be capitalized applying the rules for capital contributions. (4410.16)

The recognition of donated materials and services is optional. In many cases it may be too onerous to estimate the hours and value of volunteer time. Charitable organizations may be issuing tax receipts for donated materials, and may have information regarding donated materials readily available, however, donated services do not qualify as charitable donations for income tax purposes.

If no estimate of the value of materials and services is made for the financial statements, it may still be useful to disclose, in a note, information such as the number of volunteers and the hours worked.

Required Disclosure
The organization should disclose its policy for donated materials and services, and it should disclose the nature and amount of donated materials and services recognized in its financial statements. (4400.23,.24)

A sample of this note disclosure is found in SpringTime’s financial statements.