What is a contribution? How are contributions classified? (NONPROFIT FINANCE)

Expert Solution

Contributions are unconditional transfers of assets (or a settlement of liabilities) to a nonprofit entity that are nonreciprocal — meaning the donor receives nothing of value in exchange for the donation

Contributions can be classified as unrestricted, temporarily restricted, or permanently restricted. Also, contributions can be in the form of cash or noncash, such as tangible property or services, or they could be recognized as a donor’s promise to give cash or noncash resources.
A contribution should be recognized at its fair market value in the period it was received and/or unconditionally given. Donor-imposed restrictions do not affect the timing or value of the recognition

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