Donated Materials and Services

The majority of not-for-profit organization revenue is generated from donor contributions.  But donors also contribute services, property and/or equipment and volunteer hours.  How are these donations recognized in the financial statements?

If the services require a specialized skill and you would have typically paid for them had they not been donated, then you must recognize them as contributions at the price and/or rate of the amount received.  You may ask the service provider to provide an estimate of the fair value of the services, in order to substantiate the estimated value.

Perhaps your organization received several laptops from a local business. These materials should be reflected as contributions at their estimated fair (market) values on the date you received them.  A way of establishing a record of ownership and value of the property is to ask the donor for documentation when the property is provided.

It is very common for individuals to donate their time assisting with fundraising efforts or program services.  It can be difficult to find a basis for these donated services and these services may not require specialized skills.  The contribution is valid, however not recognized in the financial statements, but may be disclosed in the footnotes.