Accounting for Contributed Investments for Nonprofits

Contributed investments for a nonprofit organization refer to assets in the form of financial securities, such as stocks, bonds, mutual funds, or other marketable securities, that are donated to the organization by individuals, corporations, or other entities. These investments are considered non-cash contributions and can play a significant role in helping nonprofits achieve their financial goals and support their missions.

Accounting Treatment for Contributed Investments:

When a nonprofit receives contributed investments, it needs to follow specific accounting procedures to accurately record and report these donations. The accounting treatment involves several steps:

  1. Recognition and Valuation: The nonprofit must initially recognize the contributed investments as revenue at their fair market value on the date of the donation. Fair market value is the price at which the investment could be sold in an open market between a willing buyer and a willing seller. The organization may need to work with financial professionals or use reputable financial data sources to determine the fair market value.
  2. Recording the Contribution: The nonprofit should debit an appropriate revenue account (e.g., “Contributed Investments Revenue” or “Donated Securities Revenue”) and credit an account such as “Contributed Investments” or “Securities Receivable” to reflect the value of the donated investments. This establishes a record of the contribution on the organization’s books.
  3. Subsequent Valuation and Reporting: Since the value of financial securities can fluctuate over time, the nonprofit should periodically reassess the fair market value of the contributed investments. Any changes in value are recorded as adjustments to the contributed investments and revenue accounts. Changes in value are typically recognized in the financial statements during the accounting period in which they occur.
  4. Realization of Gains or Losses: When the nonprofit decides to sell the contributed investments, any gains or losses realized from the sale are recorded in the organization’s financial statements. Gains increase the revenue, while losses decrease it. The accounting treatment for gains and losses follows the principles of Generally Accepted Accounting Principles (GAAP) or relevant accounting standards applicable to the organization.
  5. Disclosure and Reporting: The nonprofit is required to disclose information about contributed investments in its financial statements, including the nature of the investments, their fair market value, changes in value, and any restrictions on their use. This information provides transparency to stakeholders and helps demonstrate the organization’s financial position.

It’s important for nonprofit organizations to maintain accurate records of contributed investments and adhere to accounting standards to ensure proper financial reporting and compliance. If the nonprofit receives restricted contributions (i.e., donations with specific conditions or limitations on their use), additional accounting considerations may come into play to ensure the organization’s use of the assets aligns with the donor’s intent. As accounting practices may vary based on jurisdiction and specific circumstances, nonprofits should consult with accounting professionals or financial advisors to ensure accurate and compliant treatment of contributed investments.

Caroline Grimm

Caroline Grimm is an accounting educator and a small business enthusiast. She holds Masters and Bachelor degrees in Business Administration. She is the author of 13 books and the creator of Accounting How To YouTube channel and blog. For more information visit:

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