Cameron Calabrese, Food for the Hungry
Benjamin, Menenberg, World Vision
Susan Talbot, World Concern
John Van Drunen, ECFA
Gary Wybenga, Medical Teams International
Why Pursue Best Practices?
 We have a higher purpose than others…shouldn’t
we have a higher standard?
 Being above reproach
 Setting the tone
 Collaborating with one another
Gift Acceptance Policy
 Purpose
 Protect the interest of donor, charity, and the cause.
 Ensure gifts provide maximum benefits
 Encourage donors to make gifts without encumbering
their own or the organizations resources
 Optimize opportunities to secure gifts from
individuals to causes without compromising or
endangering the reputation of the charity
General Guidelines
 Not inconsistent with exempt purpose
 Irrevocable gifts – donor financial jeopardy?
 Any gift presented without approval is not received
until determined to be in the donor’s best interest
 Key staff are notified of any potential gift
 Donor legal counsel?
 Donor privacy
 Through review
 Professional advice
General Guidelines
 Donor capacity?
 IRS conforming acknowledgement
 Investment considerations evaluated separately
 No finder’s fees
 Any written instruments properly reviewed
 Deal with specific guidelines for different kinds
of property
Valuation Issues
 Scope of presentation
 Highlights of FAS 157
 How to value a GIK donation
 Recommended sources for further research
Valuation Issues
Highlights of FAS 157
 Definition of fair value
 “the price that would be received to sell an asset…in an
orderly transaction between market participants at the
measurement date” (ASC 820-10-35-2)
 Exit market concept
 Market participants, principal market
 Reciprocal versus non-reciprocal transactions (FAS 116)
 Input levels – majority of GIK donations will use level
2 inputs (i.e., “like-kind” values)
Valuation Issues
How to Value a GIK Donation
 Wholesale versus retail – most NPOs will typically use
wholesale values due to quantities of GIK goods received
 “Like-kind” valuation
 How to determine a “like-kind” value?

Average of 5-7 published prices*

If published prices are retail values, may need to adjust
to wholesale
 NPOs have a responsibility to independently
ascertain a donation’s value; cannot rely solely on
donor-provided value
* This number of sources is a guideline only and is not a prescription from AERDO
Valuation Issues
Recommended sources for further research
Primary Source
 FAS 157 (now included within Topic 820 in FASB Codification)
Secondary Sources
 FAS 116 (now included within Topic 958-605 in FASB Codification)
 AERDO Standards
 Unofficial FASB response to NPO Letter – October 2008
 AICPA NPO Guide
End Use Reporting
 Do we discuss both our final reports and the fields’
final reports (macro and micro)?
 Techniques to obtain the reports donors desperately
want – no magic bullet
 Media reporting
 Time constraints
 Personal stories
 The dangers of scale
GIK Disclosures
 Financial statements should disclose information
about the valuation, source, and use of GIK. The
basis and method for valuing donated GIK
should be disclosed in an organization's financial
statements.
 Appendix C – sample. Make a spreadsheet using
categories as columns.
 Preparing this helped in completing the 990.
Excel Spreadsheet to Track GIK
SHIP
DATE
INVOICE
DATE
INV
CONSIGNEE
TYPE OF
COMMODITY
TYPE OF
DONOR
10/2/2009
10/2/2009
62679
Africa/Kenya
WC
Food
WFP
FMV
10/25/2009
10/28/2009
62680
Africa/Somalia
WC
Medical
Supplies
Nonprofit
FMV
11/5/2009
11/7/2009
62681
Africa/Sudan
WR
School
Supplies
Individual
FMV
11/16/2009
11/19/2009
62682
Africa/Sudan
WC
Clothing
For Profit
FMV
11/20/2009
11/25/2009
62683
Africa/Kenya
WC
Pharmaceuticals
For Profit
FMV
QTY
Value
Each
Total
AWP
Value
990 REGION
COUNTRY
Method
#
BENEF
# of
gifts
0.00
0
Inventory
 Scope of presentation
 AERDO recommendations for inventory
 Assigning value to inventory on-hand
Inventory
AERDO recommendations for inventory
 Organizations should proactively establish systems
to track and report inventory
 Option 1 – GIK recognized on date of donation as
Revenue and Inventory. When GIK is expended in
programs, record expense and reduction of inventory.
 Option 2 – GIK revenue and expense recognized on
date of donation. Make a year-end adjustment to
recognize NPO’s inventory by reducing expenses and
increasing inventory.
Inventory
Assigning value to inventory on-hand
 Example: NPO receives 10 donations of 10 pallets each of
t-shirts during the year; at year-end, 20 pallets of t-shirts
remain in inventory – how to value these 20 pallets?
 Alternative A – tie directly to donation value

Very accurate, but NPOs may lack ability to track GIK by each
donation from revenue to inventory
 Alternative B – calculate average pallet (or other inventory
metric) values based on all donations received during the
year, and assign average pallet values to remaining inventory

Reasonably accurate, uses fewer resources; consider
materiality
Records Retention
 AERDO standard 4.9 requires the retention of GIK
documents
 Documentation of product value
 A specific donation inventory
 Verification of donation provided from the donor
 Documentation of the end-use or transfer of donation
 Generally 7 years
 Conditions/restrictions – 7 years after expended
Processing Fees
AERDO Standard 6
Service fees related to GIK transactions must not be
based upon the value of those gifts but should reflect
the expenses incurred to administrate, process,
warehouse, manage, and handle the GIK provided
Donor Intent
 Establish systems to adequately track donorrestricted gifts and related expenses
 Apply overhead charges to restricted gifts based
on cost analyses only
Stewardship Philosophy
 Maintain systems to provide project reports,
including financial data and measurable results
 Regularly determine if donor-restricted net
assets have been used for operational purposes
 Provide adequate due diligence for funds (cash &
noncash).
 Fraud prevention efforts
 Compare solicitations and philosophy
Pass-Through
 Note revenue recognition aspects of AERDO
standard five
 Expend all donor-restricted gifts under the
discretion and control of the organization,
avoiding all earmarked gifts, and clearly
communicate these policies to donors.
Deputized Fund-Raising
 Terminology
 Clearly communicate to donors
 Clearly communicate to workers
 Discretion and control
 Keep clear which property belongs to the
organization
Donor Privacy
 How is donor information used?
 Who is it shared with?
 Removal process
 Communicate a policy
Cameron Calabrese, Food for the Hungry
Benjamin, Menenberg, World Vision
Susan Talbot, World Concern
John Van Drunen, ECFA
Gary Wybenga, Medical Teams International