Discussion:Accounting for Lifetime Memberships

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Discussion Forum Index --> Accounting Questions --> Accounting for Lifetime Memberships


Kyea (talk|edits) said:

23 September 2012
Do 501 c 3 organizations had to account for revenue generated from lifetime memberships in a distinct and different way than from all other sources of income? I can't find anything to indicate such.

Also, doesn't the lifetime membership pertain to the life of the issuing entity as opposed to those that purchase the membership?

Podolin (talk|edits) said:

23 September 2012
Also, doesn't the lifetime membership pertain to the life of the issuing entity as opposed to those that purchase the membership? Wouldn't it be whichever ends first?

Kyea (talk|edits) said:

24 September 2012
Yes, Padolin I believe you are correct. The statement would have been better stated if I had substituted "as well as" for "as opposed".

Podolin (talk|edits) said:

24 September 2012
I claim zero expertise on your question, but I'd guess that the GAAP accounting would be to defer the revenue and amortize it over an experience-based number of years, and that the same accounting would be acceptable for the 501(c)(3). That assumes the membership is something that allows the member privileges that otherwise must be purchased annually. If it is merely a marketing tool to get contributions, I'd say it is immediate revenue, not deferred. What is the nature of the charity, and what do life members get?

Captcook (talk|edits) said:

24 September 2012
The other dynamic here is whether this source of revenue is material. One organization I worked with received about $2,000 a year from "lifetime" memberships, but other sources of income were greater than $300K. We passed on any special attention to these memberships and picked it all up as current revenue. No reason to kill a fly with an atom bomb.

Kyea (talk|edits) said:

25 September 2012
Padolin and Captcook: Actually the organization is set up more along educational lines. We offer instruction and workshops in genealogy. The lifetime memberships are really a small portion of our annual membership dues. Membership revenues are 90 percent of our income.

Life members get no more than those who pay their dues annually.

Podolin (talk|edits) said:

25 September 2012
Then I think it is current income. Partly because of immateriality, but also because they get no future benefits, nor does the org. reduce any future expenses. I am a life member of an org., but I still get solicited for annual contributions.

EmpireCPA (talk|edits) said:

25 September 2012
Podolin's comment where he claims zero expertise paraphrases ASC 958-605-25-1. Also, in my experience, Captcook is right on regarding the magnitude of "lifetime" fees relative to ongoing fees.

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