Tracking donor restrictions and understanding the implications of those restrictions on revenue recognition are common challenges for nonprofits — especially if they try to manage these important metrics with spreadsheets.

Updated revenue recognition standards for nonprofits issued as part of FASB ASU 2018-18 and ASC Topic 606 represent significant changes that increase the complexity of nonprofit accounting.

Under Topic 606, for example, revenue from nonreciprocal contributions is recognized when any donor-imposed conditions or restrictions are met. This can mean a performance metric (such as the number of people served) or a restriction on the expenditure’s timing or purpose.

When a donor imposes conditions or restrictions on their gift, it’s critical for a nonprofit to track its expenditures very carefully and recognize revenue only when those conditions have been met. Tracking these milestones in spreadsheets, however, is cumbersome, subject to mistakes, and difficult to keep current.

In contrast, a solution like Sage Intacct automates this common nonprofit accounting challenge while improving visibility into your organization’s revenue and performance with easy to use revenue recognition tools.

For instance, nonprofits can enhance donation tracking by creating condition-based milestones and defining a schedule to recognize the associated revenue automatically. Similarly, you can track donor-imposed restrictions and automate journal entries as those restrictions are released.

Automating revenue tracking and recognition enhances the accuracy of your organization’s financial reporting and its compliance processes, while demonstrating transparency to current and prospective donors. Using Sage Intacct, nonprofits can highlight how funds are being used for their intended purposes, without having to wrestle this data out of spreadsheets or prepare reports manually.

Other tools in the Sage Intacct solution include customizable report writing tools, chart and graph generators, and the ability to automate reports including GAAP financial statements, Form 990 submissions, FASB compliance reports, and other key documents.

Learn more about managing grants more effectively in Sage Intacct in this video https://youtu.be/nTmU61-7RWI or reach out to request a demo at info@ssfllp.com.