Glossary
Revenue & Donations

Contribution

By: Alec Hollingsworth
Updated:  
June 2, 2025

DEFINITION:

A contribution is a voluntary gift of money, goods, or services given to a nonprofit organization without expecting anything in return.
A contribution is a voluntary, non-reciprocal transfer of assets, such as cash, securities, goods, or services, made to a nonprofit organization by individuals, corporations, or foundations. Unlike payments for goods or services, contributions are given without the expectation of receiving anything of equal value in return. Contributions may be unrestricted, allowing the organization to use the funds where most needed, or restricted for specific purposes or projects as designated by the donor. Contributions are a primary source of revenue for many nonprofits and must be properly recognized and recorded in accordance with accounting standards and donor stipulations.

Key Takeaways

  • Contributions are voluntary and non-reciprocal gifts.
  • They can be restricted or unrestricted based on donor intent.
  • Proper tracking is essential for compliance and reporting.
  • They form a major part of nonprofit revenue.

Why It Matters

Accurately tracking contributions ensures transparency, legal compliance, and effective fund management for nonprofits.

Real World Example

A local animal shelter receives a $5,000 check from a community member who wants to support its general operations. The donor does not request anything in return and does not specify how the funds should be used. The shelter records this as an unrestricted contribution in its accounting system. Later, the shelter uses Aplos to generate a report showing all contributions received during the year, which helps in preparing financial statements and acknowledging donors for their support. This process ensures transparency and maintains donor trust.

How Aplos Helps

In Aplos, contributions can be easily tracked, categorized, and reported to ensure nonprofits maintain accurate records for compliance and donor relations. The system allows users to distinguish between restricted and unrestricted contributions and generates reports that help organizations manage their revenue streams effectively.
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Frequently Asked Questions

What is considered a contribution in nonprofit accounting?

A contribution is any voluntary transfer of money, goods, or services to a nonprofit without expecting anything of equal value in return.

How does Aplos help track contributions?

Aplos allows nonprofits to record, categorize, and report contributions, distinguishing between restricted and unrestricted funds for clear financial management.

Are all donations to nonprofits considered contributions?

Yes, most donations qualify as contributions, but some transactions, such as those involving goods or services in return, may be treated differently for accounting purposes.

Why is it important to track restricted and unrestricted contributions?

Proper tracking ensures compliance with donor wishes and legal requirements, and helps nonprofits allocate resources appropriately.

What documentation is needed for a contribution?

Nonprofits should provide receipts or acknowledgments to donors and maintain records for auditing and reporting requirements.

Related Terms

Class Tracking
Board‑Designated Fund
Management Letter
Time Tracking
Petty Cash
CSV Import

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