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Gifts in Kind to Ministries: Where are They Reported on Financial Statements?

Question:

How should a church properly report Gifts in Kind on its financial statements? Are they included on an income and expense report or only on a donor's contribution statement?

These gifts could be intangible--for example, free-rent facilities from a landlord or services from a professional--or tangible--for example, a vehicle.

Answer:

Most churches do not record these gifts in their general ledgers for inclusion on their financial statements. Only churches undergoing independent Certified Public Accountant financial audits would typically consider reporting these amounts and then only if they are material.

According to FASB No. 116 (Page 4), "contributions of services shall be recognized if the services received (a) create or enhance non-financial 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."

Regarding donor acknowledgement, the church should not attempt to value these gifts. In these cases, the donor or a certified appraiser (in the case the gift is valued greater than $5,000) is responsible for valuing the gifts. The church should simply acknowledge the receipt of the gift item with a description of the item and its condition.




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