Wiley Not-for-Profit GAAP 2020

12SPLIT-INTEREST AGREEMENTS

• Perspective and Issues
• Concepts, Rules, and Examples
  • Revocable Split-Interest Agreements
  • Irrevocable Split-Interest Agreements
    • Initial recognition of unconditional irrevocable agreements
    • Recognition during the agreement's term
    • Recognition upon termination of agreement
  • Financial Statement Presentation
  • Examples of Split-Interest Agreements
    • Charitable lead trust
    • Perpetual trust held by a third party
    • Charitable remainder trust
    • Charitable gift annuity
    • Pooled (life) income fund
  • Split-Interest Agreements with Embedded Derivative Instruments
    • Determining if a split-interest agreement contains a derivative instrument
• Disclosure Requirements

PERSPECTIVE AND ISSUES

Split-interest agreements are a special type of contribution that result from sharing of legal rights to certain assets by the not-for-profit organization and other beneficiaries. Some donors find it beneficial to enter into trust or other arrangements under which the not-for-profit organization receives benefits that are shared with other beneficiaries. Chapter 6 of the AICPA Audit & Accounting Guide Not-for-Profit Entities (the AICPA Guide) provides significant guidance and background on split-interest agreements that is incorporated in this chapter. Applicable GAAP requirements have been incorporated into the FASB Codification primarily at FASB ASC 958-325.

In October 2011, the AICPA issued a whitepaper, “Measurement of Fair Value for Certain Transactions of Not-for-Profit Entities,” ...