FASB 116 is the accounting standard that tells nonprofits how to record the gifts they receive. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 116, Accounting for Contributions Received and Contributions Made, in June 1993. Its rules now live in the FASB Accounting Standards Codification at ASC 958-605, the revenue recognition subtopic for not-for-profit entities. This article explains what FASB 116 requires, how it worked alongside FASB 117, and how later updates, including ASU 2016-14, ASU 2018-08, and ASU 2020-07, built on it. What Is FASB 116? FASB 116 sets the rules for recognizing contributions, which are gifts of cash, other assets, or services given voluntarily and without the donor receiving something of equal value in return. Under the standard, as summarized by FASB: Contributions received are generally recognized as revenue or gains in the period they are received, measured at fair value. Unconditional promises to give, often called pledges, are recognized when the promise is made, not when the cash arrives. Conditional promises to give are not recognized until the conditions are substantially met. ASU 2018-08 later clarified this as the point when the barriers in the agreement are overcome. Contributions are reported by whether donor restrictions apply. FASB 116 was effective for fiscal years beginning after December 15, 1994. Smaller organizations, those with less than $5 million in total assets and less than $1 million in annual expenses, had one more year, to fiscal years beginning after December 15, 1995. FASB 116 and ASC 958-605 Today When FASB launched the Accounting Standards Codification in 2009, the original numbered statements were superseded and their guidance was reorganized by topic. The contribution rules from FASB 116…
