How to Account for Donated Conservation Easements in Nonprofits

When a nonprofit receives a donated conservation easement, it’s more than a legal agreement—it’s a valuable in-kind contribution that must be properly recorded to ensure accurate and transparent financial reporting.

Under FASB ASC 958-605, nonprofits must recognize in-kind contributions at fair value. That means if a landowner donates a conservation easement and provides a qualified appraisal (or the nonprofit commissions one), the appraised value should be recorded as contribution revenue in the year the easement is granted.

How to Record the Asset

But what about the asset side? That depends on your organization’s accounting policy.

Most nonprofits do not capitalize conservation easements due to the limited marketability and restrictions on sale or transfer. Instead, they treat the easement as a non-capitalized in-kind contribution and provide detailed disclosure in the footnotes. However, some nonprofits do capitalize them as intangible assets under ASC 958-360 if the easement meets criteria for control and future benefit.

Stewardship and Endowment Contributions

In addition, many easement donors or funding agencies provide stewardship or endowment contributions—restricted funds to monitor and defend the easement in perpetuity. These should be recorded as donor-restricted revenue and tracked accordingly.

Example Journal Entries

If your nonprofit is granted an easement worth $120,000 and receives $35,000 in stewardship funds:

• Record $120,000 as in-kind contribution revenue
• Record $35,000 as restricted cash or investments
• Disclose the easement’s nature, value, and purpose in the footnotes

Conclusion

Properly accounting for easements demonstrates integrity and builds trust with donors, regulators, and the public.