Facebook Twitter

GAAP For Non-Profits › Specific Financial Statement Items

Unused Contributions

There is a problem where an organization receives more contributions for a particular purpose or program than are necessary for the purpose or the program. How does one account for contributions that may never be spent on the designated purpose?

A few possibilities exist:

  • The organization may have to repay the contribution. In which case we may have to record a liability and reduce our deferred contribution balance. (Or where the contribution was accounted for in a restricted fund, it may be necessary account for the reduction of the revenue originally recorded in the fund, and set up a liability.)
  • The contributor may grant permission to use the money in other areas. In which case, it may be necessary to show a reduction of revenue in the original fund and show new revenue in the receiving fund.
  • A contingency note may be required if the accounting for the contribution is uncertain.