Sometimes it's difficult to determine whether a payment to a nonprofit is contractual or a contribution.The presentation of the revenue in the nonprofit's statement of activities will be determined based on the type of payment; contributions may be restricted (e.g. temporarily restricted), but contractual payments will always be presented in the unrestricted portion of the statement of activities. Also contractual payments may result in deferredrevenue at year-end while contributions will not.

Nonprofit NameClassification of Amounts to be Received

Contract Yes No Contribution Yes No Key Factors

1 Nonprofit solicited a contribution?Intent of Arrangement

2Purpose of Arrangement

3

Determining Amount

4

Penalties Assessed

5Delivery of Assets

Conclusion: The arrangement is a: ________________________________________________.

Please answer "contract" or "contribution".

Nonprofit is seeking resources in exchange for Nonprofit's provision of services?

Nonprofit is transferring resources/ services in exchange for payment?

Donor is making a contribution to support Nonprofit's programs?

Payor pays Nonprofit an amount equal to the value of assets/services provided by Nonprofit.

Donor determines the amount of the payment.

Nonprofit is penalized for nonperformance. Provisions for economic penalties exist beyond the amount of payment.

Nonprofit is not penalized for nonperformance. Penalties are limited to the return of the unspent amount.

Assets/services are to be delivered to the payor.

Assets/services are to be delivered to individuals or organizations other than the provider.

The conclusion can be arrived at by determining which classification (i.e. contract or contribution) abovehas the most "yes" answers.