Accounting Standards on Our Radar: What Nonprofits Should Be Watching 

What We’re Watching at the FASB 

While there have not been any major new accounting standards issued specifically for nonprofits recently, the Financial Accounting Standards Board (FASB) continues to explore projects that could influence financial reporting in the years ahead. Although these initiatives remain in various stages of research and discussion, nonprofit organizations, finance committees, and audit committees should stay informed about developments that may ultimately affect how financial information is presented and communicated to their stakeholders. 

Below are several areas we are monitoring. 

Performance Reporting and Financial Metrics 

Donors, grantors, investors, lenders, and governing boards increasingly seek meaningful performance information beyond the traditional financial statements. As a result, standard setters continue to evaluate how financial metrics and performance indicators are used and communicated. 

While no new requirements have been proposed for nonprofit organizations, discussions around financial performance reporting reflect a broader focus on providing users of financial statements with clearer and more decision-useful information. 

Digital Assets and Emerging Technologies 

As organizations increasingly receive or hold digital assets, accounting standard setters continue to evaluate whether existing guidance adequately addresses emerging transactions and technologies. 

While cryptocurrency contributions remain relatively uncommon for many nonprofits, organizations considering acceptance of digital assets should establish appropriate accounting policies and procedures, valuation methodologies, and internal controls. 

Software and Technology Investments 

Organizations continue to make significant investments in cloud-based systems, cybersecurity infrastructure, data analytics platforms, and artificial intelligence tools. 

Standard setters remain focused on ensuring accounting guidance keeps pace with rapidly evolving technology arrangements and software implementation costs. As nonprofit organizations modernize their operations, understanding how technology expenditures should be accounted for remains increasingly important. 

Enhanced Transparency and Disclosure Expectations 

Regardless of whether new accounting standards are issued, the trend toward greater transparency continues. 

Donors, grantors, regulators, and governing boards increasingly expect organizations to provide clear explanations regarding: 

• Revenue sources 

• Liquidity and reserves 

• Endowment activities 

• Related-party relationships 

• Significant estimates and risks 

Adding more rigor around disclosures help stakeholders better understand an organization’s financial position and stewardship of resources. 

Artificial Intelligence and Financial Reporting 

The rapid adoption of artificial intelligence is creating new opportunities and risks for financial reporting. 

Although no formal accounting guidance currently addresses the use of AI in preparing financial information, organizations should consider: 

• Data governance policies 

• Documentation standards 

• Review and approval controls 

• Confidentiality and cybersecurity risks 

We expect regulators, auditors, and standard setters to continue monitoring this area closely. 

Final Thoughts 

The accounting profession continues to evolve alongside changes in technology, stakeholder expectations, and the nonprofit operating environment. While many FASB projects take years to develop into authoritative guidance, organizations that stay informed are generally better prepared to respond when changes occur.