A nongovernment, not-for-profit environmental organization conducts a mailing about the dangers of global warming. Included in the mailing is a request for donations. How should this activity be reported be in the statement of activities?

Question

Quizplus · Accepted Answer

According to GAAP (Generally Accepted Accounting Principles), if a solicitation for donations includes information about the organization's activities or accomplishments, the costs of the solicitation should be allocated between fundraising and program support. However, if the solicitation makes a strong appeal for a contribution or provides information about how to contribute, the costs of the solicitation should be reported as fundraising expenses unless certain criteria are met. Therefore, in this case, the mailing about the dangers of global warming with a request for donations should be reported as fundraising, unless specific criteria are met.

A Nongovernment, Not-For-Profit Environmental Organization Conducts a Mailing About the Dangers