One thing to know is if you have any professionals donate services that you would normally have to pay for you should be recording that time as an “in-kind” contribution. FASB states that if the services donated (a) create or enhance nonfinancial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation.

Examples to watch for are ….

Accountants, lawyers, electricians, plumbers, teachers, carpenters, doctors, even nurses. One important key to remember is that these are services that you would normally pay for or incur the cost for operations or a non-financial asset.

How do you record these services, like most donated items, you would record them at their fair market value; a.k.a. the price you would have paid had you had actually contracted the services. So how do you record the “donation” of service?

Account Name                 Debit     Credit

In-Kind Service Expense      $1,000
In-Kind Service Revenue                 $1,000

As you can see this entry hits both your expense as well as your income in equal amounts, so there isn’t a “equity or net-asset” affect.

However, if you received donated construction management services (capitalized as a component of construction costs), this is the following entry:

Account Name                      Debit     Credit

Construction in progress       $1,000
In-Kind Service Revenue                   $1,000

This type of donation affects “non-financial assets” and is capitalized/recorded on the statement of financial position – ultimately increasing net assets.

Another point…don’t forget to track these non-cash donations. If they exceed $25,000 you must report them on Schedule M of the Form 990.