Wiley Not-for-Profit GAAP 2015: Interpretation and Application of Generally Accepted Accounting Principles

13 FUNDRAISING AND JOINT COSTS

Perspective and Issues

Concepts, Rules, and Examples

Joint Costs That Include a Fundraising Appeal

Basic understanding

Basic guidance

Allocation methods

Criteria

Purpose criterion

Audience criterion

Content criterion

Incidental activities

Disclosures

Contributed Items Used for Fundraising Purposes

Reporting Special Events

Reporting No Fundraising Expenses

Disclosure Requirements

Appendix A Checklist

PERSPECTIVE AND ISSUES

Fundraising expenses are those expenses incurred to induce donors to contribute to an organization. Such expenses must be reported separately in the financial statements of organizations that solicit significant amounts of gifts from the general public. The FASB standards require such disclosure by all not-for-profits (except where these costs are immaterial to an entity). Issues relating to these expenses include what types of expenses should be called fundraising, when they should be reported as expenses, and when and how to allocate multiple-purposes expenses. Chapter 14 also discusses functional reporting requirements. The reporting of fundraising expenses is important to readers of financial statements of not-for-profit organizations. Readers are interested in the percentage of fundraising expenses to the organization's program expenses and total expenses. They are also interested in how much money is raised for each dollar of fundraising expenses.

In certain circumstances, joint costs of informational materials and activities ...