Statement of Financial Accounting Standards No. 116

Statement of Financial Accounting Standards No. 116 (SFAS 116) outlines how not-for-profit organizations should report contributions and donations in their financial statements. It requires these organizations to recognize donations as revenue when they are received, rather than when they are used. SFAS 116 also emphasizes the importance of distinguishing between different types of contributions, such as cash, goods, and services, to present a clearer picture of an organization’s financial health and resources. This standard helps ensure transparency and consistency in how nonprofits report their funding.