Contributions receivable follow essentially the same recognition criteria as other accounts receivable. To be considered a receivable, the amount must be reasonably estimatible and collection must be reasonably assured. (4420.03) Where the collection is not assured, the amount may be offset by an allowance. A contribution does not need to be recognized to allow for the recognition of the receivable. So long as there is reasonable assurance of collection and a reasonable estimate of the amount, an organization must accrue its contributions receivable, even where the offsetting entry may only be to deferred contributions. (1001.41)
In deciding whether or not a government grant is receivable, one would look for assurance as to whether the government’s conditions for receiving the payment will be met and whether there is reasonable assurance that the government’s conditions will remain unchanged, as government policy is susceptible to change. If the organization intends to recognize the grant as revenue of the period, it would have to ensure there is reasonable assurance that all revenue recognition criteria have been met: the period of funding is appropriate, all conditions on the use of the funding have been met, and so on.
An organization should recognize pledges where it has reasonable assurance as to the collectibility of the pledges based on past experience. Past fundraising efforts may provide the ability to estimate the percentage of pledges that will be received, especially if the same event is held annually.
An organization may be named as the beneficiary of a bequest in a will. However, the organization will not normally have reasonable assurance that the amount will be received until either the time of death, the probate of the will or the actual receipt of the donation.
If an organization accrues pledges or bequests, it must disclose the amounts recorded as receivables and revenue. (4420.08)