I would appreciate help on a Finance Question please. 

Our charity received a donation of a premise that is currently used for our charitable activities and will be continued to be used for our charitable activities. Prior to this we had use of the premises with no rent. Legal ownership has now been transferred with no restrictions on use/sale and no mortgage attached. I understand that this building is classified as an endowment fund. Is the accounting debit fixed asset credit reserve account within an endowment classification or could it be debit fixed asset credit income within an endowment classification?

Any help wold be greatly appreciated.


paul.meade's picture

Hi Breda,Our thinking on it

Hi Breda,

Our thinking on it is that it’s unlikely to be an endowment and we're not sure why it is being considered in this light rather than simply a donation. It is probably worth clarifying with the person raising the query, however, why they believe it to be an endowment just to fully rule this out.

Since there are no restrictions attached, the property is not protected in any way nor are they limited in their use of it we would think it’s simply a donated asset rather than an endowment. SORP 6.13 states that “If a charity is given facilities for its own use which it would otherwise have purchased, these must be included in the charity’s accounts when received, provided the value of the gift can be measured reliably”. SORP 6.20 states that “Goods donated for on-going use by a charity carrying out its activities are recognised as tangible fixed assets with the corresponding gain recognised as income from donations within the SOFA”.

We think it’s more likely that it falls into the donated asset category as per SORP section 6  and so debit fixed asset and credit to income in the year ownership was transferred at fair value.

The other question this raises is whether the free use of the property prior to this has been recognised as a donation in both income and related expenditure in accordance with Section 6 of SORP.”

We hope that helps. If, however, you need any further input, please feel free to call The Wheel's Director of Finance, Tony Ward, on (01) 454 8727.


Paul Meade
Information Coordinator, The Wheel