Archives

Contributions v. Exchange Transactions

When a non-profit receives grants, awards, membership dues or sponsorships, the organization needs to make a determination to the treat the transaction as an exchange transaction (earned revenue) or a contribution. In an exchange transaction, each party receives and sacrifices something of approximately equal value; whereas in a contribution transaction, transfers of assets are nonreciprocal and the value, if any, returned to the resource providers are incidental to potential public benefits.

Below are some tips to help determine whether a transaction should be treated as a contribution or as an exchange transaction.