During our August nonprofit workshop, our nonprofit team shared the latest in accounting and tax updates, as well as insights from AICPA’s recently revised Audit & Accounting Guide for Not-for-Profit Entities. We posed various questions during our workshop and over the next few blog postings, we will share the answers to those questions.
Q. Are overdue pledges receivable still considered temporarily restricted for time?
A. No. Time restrictions on contributions receivable lapse when the receivable falls due.
The rules about time restrictions and pledges are as follows: A time restriction is implied on unconditional promises to give that are due in future periods (unless explicit donor stipulations or circumstances surrounding the receipt of the promise make it clear that the donor intended it to be used to support current activities). For example, if a donor pledges $20,000 to the 2013 Aids Walk, with payment to be made in 2014, no time restriction is implied as the donor explicitly specified a current year event. The purpose restriction will be met when the walk takes place, in 2013, at which time the net assets become unrestricted.
Q. What happens to a permanent endowment if the donor stipulates that the gift principal is to be held in a particular investment security?
A. Check out our next ‘Exploring the World of Contributions ’ blog posting for the answer…