# ASC 405-958: Liabilities — Not-for-Profit Entities Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/958/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:19:40.959Z to 2026-09-10T00:20:08.319Z Record version: sha256:f635772f3a0ea59489fd0928c29e13abd1b1ffca9af0b848fa2311ccdcd1ffa7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958: Liabilities — Not-for-Profit Entities ### Machine-generated study aids ```json { "summary": "This Subtopic addresses how a not-for-profit entity accounts for its own liabilities, principally unconditional promises to give (grants/pledges the NFP makes to others). It fixes the discount rate used in a present-value measurement at initial recognition (no revision unless the fair value option under 825-10 is elected), requires discount amortization to be reported in the same functional expense classification as the original promise, and requires a maturity schedule disclosure. It also cross-references guidance for donated assets transferred to intermediaries/agents and for refundable membership interests of social and country clubs.", "key_points": [ "Recognition of liabilities from transfers of donated assets to intermediaries and agents follows 958-605-25-23 through 25-24, with initial measurement in 958-605-30-13 (405-958-25-1; 405-958-30-1).", "Initial measurement of liabilities arising from making promises to give is governed by 720-25-30-1 through 30-2 (405-958-30-2).", "If present value of amounts to be paid is used to measure the fair value of an unconditional promise to give at initial recognition (per 835-30-25-10 through 25-11), the discount rate is set at initial recognition and shall not be revised unless the promise is remeasured at fair value under the Fair Value Option Subsections of 825-10 (405-958-35-1).", "Amortization of discount on unconditional promises to give is reported in the same functional expense classification in which the promise was initially reported (405-958-45-1).", "Notes must include, in addition to 450-20-50 disclosures, a schedule of unconditional promises to give showing amounts payable in each of the next five years, the aggregate due in more than five years, and the unamortized discount for promises reported at present value (405-958-50-1).", "Membership interests such as capital shares issued by an NFP social or country club that are wholly or partially refundable on death, relocation, resignation, or at a fixed date are addressed by Subtopic 480-10 (405-958-25-3).", "NFPs that must engage an independent review entity for five years under a Medicare fraud settlement agreement look to Section 954-405-25 (405-958-60-1)." ], "categories": [ "Not-for-profit", "Subsequent measurement", "Disclosure", "Recognition" ], "audience_level": "intermediate", "student_note": "Watch the direction of the promise: this Subtopic covers promises the NFP makes (a liability), while 958-605 covers promises received (a receivable/contribution). The classic trap is revising the discount rate in later periods — the rate is locked in at initial recognition unless the fair value option is elected, and the discount amortization stays in the original functional expense line rather than becoming interest expense.", "related_topics": [ "720-25", "958-605", "835-30", "825-10", "480-10", "954-405" ], "key_concepts": [ "unconditional promise to give", "present value measurement", "fixed discount rate", "discount amortization", "functional expense classification", "maturity schedule disclosure", "agent and intermediary transfers", "refundable membership interests" ] } ``` Source downloaded (UTC): 2026-09-10T00:19:40.959Z to 2026-09-10T00:19:40.959Z Record version: sha256:08766aca17319c43e6e9abfd1408dac7a2aadd64d427e7159bff999ce72477f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/958/#00-status) SEC content: no ##### [405-958-00-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:40.959Z to 2026-09-10T00:19:40.959Z Record version: sha256:4e2f1f866eb01915a29b806bd13e146e8d1a29df79311677a9ae93de9d6c8047 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Conditional ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Functional ClassificationSupersededAccounting Standards Update No. 2016-1408/18/2016
Functional Expense ClassificationAddedAccounting Standards Update No. 2016-1408/18/2016
958-405-25-2SupersededAccounting Standards Update No. 2014-0905/28/2014
958-405-45-1AmendedAccounting Standards Update No. 2016-1408/18/2016
Source downloaded (UTC): 2026-09-10T00:19:44.991Z to 2026-09-10T00:19:44.991Z Record version: sha256:1e850599978c20a9220337a2637737dc296b48d43d171a0eec61dada3e9c1684 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/958/#05-overview-and-background) SEC content: no ##### [405-958-05-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:44.991Z to 2026-09-10T00:19:44.991Z Record version: sha256:8d82597d2362831085c33fe73459630ef5c496ad65e1028b02913f8cfed77ef6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance about [promises to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional.") made by [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs). NFPs also shall comply with the applicable standards in Subtopic 720-25. This Subtopic also identifies the Sections within the Not-For-Profit Entities Topic that provide guidance on accounting for liabilities. Source downloaded (UTC): 2026-09-10T00:19:48.744Z to 2026-09-10T00:19:48.744Z Record version: sha256:294fd4ae9976508ad58e46dfc935ff154950c53ac5438ef2f0ec25eb9ba1345d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/958/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-958-15-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:48.744Z to 2026-09-10T00:19:48.744Z Record version: sha256:25ed111fce9de02243028c5ebb9ad0005f4e3140036ea871d864f646ed3f20f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 958-10-15. Source downloaded (UTC): 2026-09-10T00:19:53.538Z to 2026-09-10T00:19:53.538Z Record version: sha256:f293e7ffd0edc4fce2dae3fd23e6ff098e51249dffb18e21750e616c62ffea23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/958/#25-recognition) SEC content: no ##### [405-958-25-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:53.538Z to 2026-09-10T00:19:53.538Z Record version: sha256:be64497c0bcfd04f1ead1518b6a1213a7f83de36dac10bc51d03b42bb3785288 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For recognition guidance on liabilities that result from transfers of donated assets to [intermediaries](https://asc.understandingaccounting.org/glossary/i/#intermediary "Although in general usage the term intermediary encompasses a broad range of situations in which an entity acts between two or more other parties, in this usage, it refers to situations in which a recipient entity acts as a facilitator for the transfer of assets between a potential donor and a potential beneficiary (donee) but is neither an agent or trustee nor a donee and donor.") and [agents](https://asc.understandingaccounting.org/glossary/a/#agent "An entity that acts for and on behalf of another. Although the term agency has a legal definition, the term is used broadly to encompass not only legal agency, but also the relationships described in Topic 958. A recipient entity acts as an agent for and on behalf of a donor if it receives assets from the donor and agrees to use those assets on behalf of or transfer those assets, the return on investment of those assets, or both to a specified beneficiary. A recipient entity acts as an agent for and on behalf of a beneficiary if it agrees to solicit assets from potential donors specifically for the beneficiary's use and to distribute those assets to the beneficiary. A recipient entity also acts as an agent if a beneficiary can compel the recipient entity to make distributions to it or on its behalf."), see paragraphs [958-605-25-23 through 25-24](https://asc.understandingaccounting.org/asc/605/958/#605-958-25-23) . ##### [405-958-25-2](https://asc.understandingaccounting.org/asc/405/958/#405-958-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:53.538Z to 2026-09-10T00:19:53.538Z Record version: sha256:e993647d78d2a0519b32bb193ebd1e5e21b95ccc4be6e5315fcb983e67a35e15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [405-958-25-3](https://asc.understandingaccounting.org/asc/405/958/#405-958-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:53.538Z to 2026-09-10T00:19:53.538Z Record version: sha256:ce2f3b71c47101ef5b600ab2573178588e5afd32058f09649bfa3b00733d70a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A not-for-profit entity (NFP) that is a social or country club may issue membership interests, such as capital shares. If those interests are wholly or partially refundable when the member dies, moves away, resigns his or her membership, or at a fixed date, Subtopic 480-10 provides guidance. Source downloaded (UTC): 2026-09-10T00:19:57.057Z to 2026-09-10T00:19:57.057Z Record version: sha256:cbe890723a0cd0c52429126e54cf531b2ae1dcb8f4d9a690eb4b1b1f96fc56b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/405/958/#30-initial-measurement) SEC content: no ##### [405-958-30-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:57.057Z to 2026-09-10T00:19:57.057Z Record version: sha256:3cc95d3132cc411c3ea93fe5ad921d9a1ece9246606d7355598c7d616581f5b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For initial measurement guidance on liabilities that result from transfers of donated assets to [intermediaries](https://asc.understandingaccounting.org/glossary/i/#intermediary "Although in general usage the term intermediary encompasses a broad range of situations in which an entity acts between two or more other parties, in this usage, it refers to situations in which a recipient entity acts as a facilitator for the transfer of assets between a potential donor and a potential beneficiary (donee) but is neither an agent or trustee nor a donee and donor.") and [agents](https://asc.understandingaccounting.org/glossary/a/#agent "An entity that acts for and on behalf of another. Although the term agency has a legal definition, the term is used broadly to encompass not only legal agency, but also the relationships described in Topic 958. A recipient entity acts as an agent for and on behalf of a donor if it receives assets from the donor and agrees to use those assets on behalf of or transfer those assets, the return on investment of those assets, or both to a specified beneficiary. A recipient entity acts as an agent for and on behalf of a beneficiary if it agrees to solicit assets from potential donors specifically for the beneficiary's use and to distribute those assets to the beneficiary. A recipient entity also acts as an agent if a beneficiary can compel the recipient entity to make distributions to it or on its behalf."), see paragraph [958-605-30-13](https://asc.understandingaccounting.org/asc/605/958/#605-958-30-13). ##### [405-958-30-2](https://asc.understandingaccounting.org/asc/405/958/#405-958-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:57.057Z to 2026-09-10T00:19:57.057Z Record version: sha256:d5baac9f9dcc844bf70f639d55dc952ca6b0f9816d66501d68d17fae9f923c87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For initial measurement guidance on liabilities that result from making [promises to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional."), see paragraphs [720-25-30-1 through 30-2](https://asc.understandingaccounting.org/asc/720/25/#720-25-30-1) . Source downloaded (UTC): 2026-09-10T00:19:59.203Z to 2026-09-10T00:19:59.203Z Record version: sha256:86b6c0f6453dd7ca644ab3634aca9d5fd1ec3baa931cf44ad5ff3c4cbb157811 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/405/958/#35-subsequent-measurement) SEC content: no #### Liability for Promises to Give ##### [405-958-35-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:59.203Z to 2026-09-10T00:19:59.203Z Record version: sha256:3e3bfeebe6e94875fe1223e3868a6a4cba9aac662647be6f9fc6b68f07029787 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the present value of the amounts to be paid is used to measure [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of an [unconditional promise to give](https://asc.understandingaccounting.org/glossary/u/#unconditional-promise-to-give "A promise to give that depends only on passage of time or demand by the promisee for performance.") at initial recognition, in conformity with paragraphs [835-30-25-10 through 25-11](https://asc.understandingaccounting.org/asc/835/30/#835-30-25-10) , the discount rate shall be determined at the time the unconditional promise to give is initially recognized and shall not be revised, unless the [promise to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional.") is subsequently remeasured at fair value pursuant to the Fair Value Option Subsections of Subtopic 825-10. Source downloaded (UTC): 2026-09-10T00:20:02.539Z to 2026-09-10T00:20:02.539Z Record version: sha256:95dd88d8ffab80b8758644784ca9040f8ac56fdc8e807e291ae26726c4e34728 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/405/958/#45-other-presentation-matters) SEC content: no #### Liability for Promises to Give ##### [405-958-45-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:02.539Z to 2026-09-10T00:20:02.539Z Record version: sha256:49f52aefd5a9b2a22fc86d03ac657bbdfd85b461e16d25106509ba2469f6ac76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amortization of any discount related to [unconditional promises to give](https://asc.understandingaccounting.org/glossary/u/#unconditional-promise-to-give "A promise to give that depends only on passage of time or demand by the promisee for performance.") shall be reported in the same [functional expense classification](https://asc.understandingaccounting.org/glossary/f/#functional-expense-classification "A method of grouping expenses according to the purpose for which costs are incurred. The primary functional classifications of a not-for-profit entity are program services and supporting activities.") in which the [promise to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional.") was initially reported. Source downloaded (UTC): 2026-09-10T00:20:04.453Z to 2026-09-10T00:20:04.453Z Record version: sha256:38e92964f1e8138972357ac0f3411747c46339b2c9c9470dd30cef76a19a64d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/958/#50-disclosure) SEC content: no #### Liability for Promises to Give ##### [405-958-50-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:04.453Z to 2026-09-10T00:20:04.453Z Record version: sha256:72def096db6fa2fdf837e4b7eb584a460d1af7a6add3aaa66d886b70ad851822 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition to disclosures required by Section 450-20-50, the notes to financial statements shall include a schedule of [unconditional promises to give](https://asc.understandingaccounting.org/glossary/u/#unconditional-promise-to-give "A promise to give that depends only on passage of time or demand by the promisee for performance.") that shows the total amount separated into amounts payable in each of the next five years, the aggregate amount due in more than five years, and for unconditional [promises to give](https://asc.understandingaccounting.org/glossary/p/#promise-to-give "A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional.") that are reported using present value techniques, the unamortized discount. Source downloaded (UTC): 2026-09-10T00:20:08.319Z to 2026-09-10T00:20:08.319Z Record version: sha256:b9ac578d37d6cf522b3ec11401cb99678c7748904f95c48a7c888aa54bccb5ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-958-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/405/958/#60-relationships) SEC content: no #### Health Care Entities ##### [405-958-60-1](https://asc.understandingaccounting.org/asc/405/958/#405-958-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:20:08.319Z to 2026-09-10T00:20:08.319Z Record version: sha256:0602a1e83e264e723257ab989f71a6780c2e859ae9f7bbac4cad25fec8fd6971 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance for [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs) that have entered into settlement agreements with the U.S. government regarding allegations of Medicare fraud that impose an obligation on the entity to engage an independent review entity to test and report on compliance with Medicare requirements each year for five years, see Section 954-405-25.