Contributions, statement of activities. Early in 2018, a not-forprofit organization received a $4,000,000 gift from a wealthy benefactor. This benefactor specified that the gift be invested in perpetuity with income restricted to provide speaker fees for a lecture series named for the benefactor. The not-for-profit is permitted to choose suitable investments and is responsible for all other costs associated with initiating and administering this series. Neither the donor’s stipulation nor the law addresses gains and losses on this permanentendowment. In 2018, the investments purchased with the gift earned $100,000 in dividend income. The fair value of the investments increased by $300,000. The not-for-profit’s accounting policy is to record increases in net assets, for which a donor-imposed restriction is met in the same accounting period as gains and investment income are recognized, as increases in unrestricted net assets.
Five presentations in the lecture series were held in 2018. The speaker fees for the five presentations amounted to $400,000. The not-for-profit organization used the $100,000 dividend income to cover part of the total fees. Because the board of directors did not wish to sell part of the investments, the organization used $250,000 in unrestricted resources to pay the remainder of the speaker fees.
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