Contributed Services and Use of Facilities

Ministries often receive contributed services from volunteers to help accomplish their missions. Additionally, they may be given use of a building or other facilities either at no cost or at a substantially reduced cost. While the accounting treatment for contributed services and use of facilities differs, the income tax treatment and IRS Form 990 presentation is the same.

Accounting treatment. While there may be many types of services performed by volunteers, donations of services are generally recognized by a ministry only if the services received either create or enhance nonfinancial assets or require specialized skills.[1]

  • Contributed services, which create or enhance a nonfinancial asset, such as inventory, land, buildings, or equipment are to be capitalized as part of the cost of the asset. Note: This does not require these contributed services to fall into the category of specialized skills.

Regarding the valuing of services that create or enhance nonfinancial assets, the ministry may either track the value of the services donated, or if a new asset is created when comparing the actual value of the asset to the cost, the difference will be considered the value of the donated services.

  • Specialized skills require the following criteria:

    • provided by individuals possessing those skills, and

    • would typically need to be purchased if not provided by donation.

Services requiring specialized skills are those provided by accountants, architects, carpenters, doctors, electricians, lawyers, nurses, plumbers, teachers, and other professionals and craftsmen. Contributed services and promises to give services that do not meet the above criteria shall not be recognized (FASB Accounting Standards Codification 958-605-25-16).

For gifts of services that meet the recognition criteria, the ministry that receives them should recognize income and expense in the period they are received and utilized. The amount of revenue and expense recognized for contributed services should be based on what the ministry would have paid for the services, had they not been contributed.

Contributions of facility usage should be reflected in the financial statements. A revenue and expense should be recognized for the fair market value of facilities which the ministry would have otherwise rented if the contribution of facility usage did not occur. Therefore, the facility contribution amount recognized in the organization’s financial statements is not based on the fair market value of the contributed facilities, but on what the ministry would otherwise be paying.

When a donor communicates that a ministry will unconditionally receive contributed services or use of facilities for more than a one-year period, the future value of the contributed services or use of facilities should be reflected as a pledge in the ministry’s financial statements.

Income tax treatment. Donations of services and use of facilities do not qualify for the charitable contribution deduction.[2]  Therefore, donors of services and use of facilities will not receive a tax benefit for their contributions.

Ministries should never issue charitable gift receipts for donations of services or the use of facilities since this would constitute issuing an improper acknowledgment. Ministries should merely express appreciation for these donations.

Example: The owner of a building provides space that has a fair market rental value of $2,000 per month to a ministry and only charges the ministry $1,000 per month. While this is a very generous arrangement by the owner of the property, it does not constitute a charitable contribution and a gift receipt should not be issued by the ministry.

Form 990 presentation. Donated services and use of facilities amounts are not included in revenue on the Form 990, but are reflected in the revenue and expense reconciliation between the audited financial statements and the Form 990.

Sample Gift of Services Letter

ABC Ministry
PO Box 5646
Yakima, WA 98904



Dear Mr. and Mrs. Giver,

Thank you so very much for your donation of (describe the type of services; i.e., website design, secretarial services, etc.) on (date of gift).

While the tax law does not permit you to take a deduction for a gift of services, we readily recognize that you have made one of the most sacrificial gifts you can make—a gift of your precious time!

If you have incurred out-of-pocket expenses in connection with your gift of services, these expenses may qualify as a charitable contribution.

To comply with the tax law, we are confirming that you did not receive any goods or services in connection with your gift.

Thanks again for your generous support of ABC Ministry!

ABC Ministry




[1] Special rules apply for ministries receiving services from personnel of an affiliate that directly benefits the recipient ministry and for which the affiliate does not charge the recipient ministry (effective for fiscal years beginning after June 15, 2014). See FASB Accounting Standards Update No. 2013-06, Not-for-Profit Entities (Topic 958): Services Received from Personnel of an Affiliate.

[2] Internal Revenue Code 170(f)(3)(A), Reg. § 1.170A-7(a). See also Logan v. Comm’r, TC Memo. 1994-445. The IRS has also ruled that a donation of the use of a vacation home does not entitle the donor to a charitable deduction. Rev. Rul. 89-51, 1989-1 CB 89.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.