Gifts-In-Kind Receipt and Financial Statement Reporting
Gifts in kind are non-monetary items that are donated to the University. Such gifts may include supplies, promotional items, contributed services, land, buildings, equipment, books, and artwork. Those gifts that are personal or real property in excess of a certain value are capitalized as outlined below.
The receipt of in-kind gifts from a donor is handled through the Office of Development & Alumni Relations in conjunction with the department intended on receiving the in-kind gift. A form is completed by the department receiving the gift and signed by the dean or senior officer to indicate the department is willing to accept the in-kind gift. Development then recognizes the receipt of the in-kind gift and updates their system with the receipt. The donor determines the value of the in-kind gift if the anticipated value is less than $5,000; in-kind gifts greater than $5,000 require appraisals, per IRS requirements, to determine their value. The donor then receives credit for the value of the in-kind gift.
Once the Office of Development & Alumni Relations recognizes the receipt, documentation is forwarded to Accounting Services, as well as University Stores. The documentation is then reviewed and the determination is made whether to capitalize/not capitalize the in-kind gifts. The Plant Fund Accountant (Accounting Services) processes the addition of land and building in-kind gifts to the fixed asset system. University Stores processes the addition of equipment, vehicle, books, and artwork to the fixed asset system.
The capitalization requirements for in-kind gifts are as follows:
- Equipment with a value of less than $5,000 is recorded as low value assets and is expensed immediately. Equipment with a value equal to or greater than $5,000 is capitalized and depreciated over eight years.
- Vehicles are capitalized if the vehicle is used for transportation purposes and will have a useful service life of at least four years.
- All in-kind artwork is capitalized; no depreciation applied to this asset class.
- Land is recorded at assessed value; no depreciation recorded to this asset class.
- Buildings are also recorded at assessed value. Buildings with a value greater than $50,000 but less than $100,000 are depreciated over ten years. Buildings with a value greater than $100,000 are depreciated over forty years.
- Note that in-kind gifts of software, as well as donations of supplies, sporting event tickets, and those of a nature other than described above, are not capitalized.
For the items that meet the capitalization requirements above, the total capitalized amount is then reported on the financial statements as revenue, along with the corresponding expense. Accumulated depreciation and depreciation expense is also recognized for the capitalized in-kind gifts to which depreciation applies.
In general, in-kind gifts that are not capitalized are not recorded as capitalized assets and are not reported in the financial statements. However, because of guidelines provided by the FCC, Public Broadcasting records both the expense and revenue through the use of transfer codes. This method of journalizing PBS gifts-in-kind allows CMU to exclude these PBS transactions on its combined financial reports but enables PBS to capture the financial data necessary for their reporting requirements.