How to Report Donated Services on Financial Statements
Donated services, like material donations, add value to a nonprofit. Due to standard accounting guidelines in reporting donations, these services are often not listed, undervaluing the actual donations received by the nonprofit. Reporting donated services on financial statements helps to alleviate this problem, ascribing value where value is given. It's both a way to acknowledge the worth of the services carried out by volunteers and to show those looking at the organization the full degree of the organization's support.
Other People Are Reading
Instructions
-
-
1
Review the nature of the donated services to determine if they meet the criteria for required financial reporting. The services that require coverage in financial statements include those that are involved in the creation or improvement of nonfinancial assets, and those services that involve specialized skills that would otherwise cost the organization funds to hire.
-
2
Assess the donated services using the fair market value of those services on the date of donation. Ask the provider for an estimate of the fair market value of the services involved or use common market costs for placing value.
-
-
3
Report the value of the donated services using the listing of "Donated Services" under the "Support" sections in your organization's "Statement of Activities" as revenue.
-
4
Support the listed amount by providing detailed information of the services -- for example, type of service donated as well as the rates and hours of the donation. Include in the notes those donated services not covered by the requirements -- general volunteers, for example.
-
1
References
Resources
- Photo Credit Comstock/Comstock/Getty Images
