Under NFP accounting, what types of donated services would be considered revenue and what would not be recorded?
The big question to ask is “Would the NFP otherwise spent money on service”? The big differentiator is whether the service requires skilled or unskilled labor.
Most of the big accounting firms encourage their senior employees to donate their time and services to local NFP’s. This is an example of specialized labor that the NFP would record as revenue without restriction.
You might also be interested in...
How are contributed assets or contribution of time valued by an NFP?
When a donor contributes assets or services (i.e. time), the NFP entity should record the donation at fair-market-value.
What is an exchange transaction under NFP accounting?
An exchange transaction is when a NFP exchanges value for donations in return. For example, if a museum donates free tickets in exchange for cash donations, then that is considered an exchange transaction. When not-for-profits recognize revenues in exchange for services provided to the resource’s provider, they will be classified as increases to net assets […]
What is the journal entry to record a donation of services for a NFP entity?
When someone donates their services, they are really just donating their time. However, the key thing to note that is that donated services must be for skilled labor and not unskilled labor. For example, a lawyer, accountant, or healthcare professional would donate services in the form of their time to provide advice. The professional would […]