Accounting and Reporting for Not-for-Profit Organizations

Case Study 14

Agency Transactions

Learning objectives

• Identify the treatment of transfers of assets to a not-for-profit (NFP) that raises or holds contributions for others.
• Identify situations when an NFP receives assets, and the donor does and does not clearly specify a beneficiary.

Background

In the past, questions arose about the treatment of transfers of assets when the reporting entity acts as an agent, trustee, or intermediary, rather than a donor or donee. Among the questions were the following:

• How do you differentiate situations where the reporting entity acts as an agent, trustee, or intermediary from those in which the reporting entity is a donor or donee?
• How should a reporting entity report those transfers if they are not contributions?
• Should a beneficiary report its rights to the assets being held by a recipient organization and if so, how should those rights be reported?
• How do you evaluate situations where the donor does not specify a specific beneficiary by name?

FASB Accounting Standards Codification^® (ASC) defines an agency transaction as “a type of exchange transaction in which the organization acts as an agent, trustee, or intermediary for another party who may be either a donor or donee.” When acting as an agent, the recipient does not recognize contribution revenue because agency transactions are a type of exchange transaction.

There can be up to three different roles played in an agent transaction:

• Donor—Makes the contribution
• Recipient entity—Accepts ...