Jitasa Nonprofit Blog

990 Mini Series: Recording and Reporting Volunteer Services

Volunteers are most likely a huge part of your organization. To find out how to record your specialized volunteers for the IRS, check out the blog below.

When to record volunteer services

Under the General Acceptable Accounting Principles (GAAP) you would record the volunteer services in your books if either of the following conditions is met:

1.  The services create or enhance non financial assets; or
2.  The services:

  • Require specialized skills
  • Are provided by persons possessing those specialized skills, and 
  • Would typically have to be purchased if not provided by donation

For example:

Your nonprofit purchases materials to improve their building. You use volunteer labor to utilize the materials and create a final, improved building. The laborers that volunteer happen to be men and/or women that work as skilled plumbers, dry-wallers, craftsmen, etc. In this case, because your volunteers are skilled laborers and they are enhancing a nonfinancial asset for your nonprofit, you would record the volunteer labor to your books as a non-cash contribution.

From the IRS 990 Form instruction page

Donated services or use of equipment, materials, or facilities:

The organization can report the amount of any donated services, or use of materials, equipment, or facilities it received or used in connection with a specific program service, on the lines for the narrative description of the appropriate program service. However, do not include these amounts in revenue, expenses, or grants reported on Part III, lines 4a–4e, even if prepared according to generally accepted accounting principles.

In plain English

You would display the income on your books and within your Chart of Accounts. You would also display this information (in a full sentence manner) within the narrative description of the program on your 990 form. However, for tax purposes you do not have to include the donated expert volunteer time on any of the Part III section of the 990. Simply reverse the income entries so that your books are accurate and correct.

Renata Poe Massie, Content Creator for Jitasa

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