The new revenue recognition guidance is here, and the amount of work involved to switch to the new framework for how not-for-profits recognize exchange revenue can take significant time. Additionally, not-for-profit entities with publicly traded debt may need to implement the new framework a year earlier than other not-for-profit entities.
The new standard applies to all contracts with customers. With so much variance in contracts used in not-for-profit organizations, you won’t be able to use a standard template. Instead you'll need to analyze each contract or group of similar contracts.
Our revenue recognition resource guide for not-for-profits identifies areas of likely impact for many not-for-profit organizations, including:
- Government and other grants
- Splitting of revenue between contribution and exchange, including special event revenue, sponsorship agreements, and membership contracts
- Identification of separate performance obligations, including those related to membership revenue, fee-for-service contracts, association fees, research and development contracts, tuition and fees
- Implementation timeline
- The five-step revenue recognition process
- Impact on tax and financial statements
Download our Revenue recognition resource guide for not-for-profits to help your organization implement the new standard.