OUR THOUGHTS ON:

Where Do Stock Donations Go on the Statement of Cash Flows?

Not-for-Profit

By Mara Bruce

Nonprofit organizations receive donations from a variety of sources and in a variety of ways. Some donations are in cash, others are in the form of property, and some are in the form of stock. There has been diversity in the treatment of stock donations in the statement of cash flows over the years. On October 22, 2012, the Financial Accounting Standards Board issued an Accounting Standards Update (ASU) to address this diversity in practice.

ASU 2012-05 provides clarification to the proper classification of these stock donations. If a nonprofit receives a stock donation and immediately converts it to cash, those cash receipts from donated stock are to be classified as inflows from operating activities, unless the donor restricted the use to long-term purposes. If that’s the case, the cash receipt from the sale of the stock is classified as cash flows from financing activities. If the donated stock is not immediately converted to cash, the sale of those financial assets would follow other sales of stock and should be classified as cash flows from investing activities.

This update is effective prospectively for fiscal years beginning after June 15, 2013. Retrospective application to all prior periods presented upon the date of the adoption is permitted. Early adoption is also permitted.

© 2012 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter

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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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