How Not-For-Profits Should Classify the Sale of Donated Securities in the Statement of Cash Flows

Emerging Issues Task Force (EITF) Releases Final Guidance on Issue 12-A

To accommodate specific tax goals, some donors give not-for-profit entities (NFPs) appreciated securities. As a matter of policy, most NFPs quickly sell those securities to convert them into cash available for immediate use. The issue, which applies only to the sale of donated securities that are not restricted for long-term purposes or permanently restricted, revolves around how those proceeds are classified. Some NFPs classify them as an investing activity, while others classify such proceeds as an operating activity.

In our most recent issue of the MHM Messenger, Mayer Hoffman McCann explores Topics 230 and 958 and provides highlights of the EITF’s guidance surrounding the sale of donated securities.

If you are interested in nonprofit accounting topics, consider subscribing to the Not-for-Profit Viewpoint, our monthly e-newsletter produced in cooperation with CBIZ. You can sign up via the MHM website.

 

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