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Agents and Intermediaries

An intermediary is a recipient entity who acts as a facilitator for the transfer of assets between a potential donor and a potential beneficiary, but is neither an agent or trustee nor a donee and donor. In this situation, the intermediary simply collects the cash or other assets from the donors and remits it to the charitable organization, or the beneficiary.

An agent is an entity that acts for and on behalf of another. A recipient entity acts as an agent for and on behalf of a donor if it receives assets from the donor and agrees to use those assets on behalf of or transfer those assets to, a specified beneficiary. A recipient entity would be classified as an agent for and on behalf of a beneficiary if it either collected funds specifically for donation to a specified beneficiary, or if that specified beneficiary granted the recipient entity the right to distribute those funds on the beneficiary’s behalf. Even if the money does not go directly to the beneficiary, but the beneficiary is directing the funds, the recipient organization is still considered the agent.

For example, assume a flower shop collected funds from its customers to donate to the owner’s favorite charity. If the flower shop was acting as an intermediary, then the donors would be aware that the funds are going to a specific organization, not just for a general purpose (i.e. “to help local schools”), and the funds would be transferred directly to that organization. If it was acting as an agent for the charitable beneficiary, then the donors would still be aware the funds are going to the specific organization; however, the beneficiary could give the flower shop permission to distribute those funds on the beneficiary’s behalf.

Accounting Treatment for Agency and Intermediary Transactions

Per FASB ASC 958-605-25, an agent or intermediary shall recognize its liability to the specified beneficiary concurrent with its recognition of cash or other financial assets received from the donor. A recipient entity that receives nonfinancial assets is permitted, but not required to recognize its liability and those assets provided that the recipient entity reports consistently from period to period and discloses its accounting policy. In these cases, there is no effect on the income statement of the recipient organization.

The specified beneficiary should recognize the right to those assets at the time they are collected by the recipient organization. This can be reported in three ways: (1) as an interest in the net assets of the recipient entity if they are financially interrelated; (2) as a beneficial interest; or (3) as an unconditional promise to give. The beneficiary will recognize the contribution revenue at fair value.

Variance Power

Variance power is the unilateral power to redirect the gift to a beneficiary other than the beneficiary specified by the donor. If an agent or intermediary is granted variance power, the accounting treatment is changed. Per FASB ASC 958-605-25-25, a recipient entity that is directed by a donor to distribute the transferred assets, the return on investment of those assets, or both to a specified unaffiliated beneficiary acts as a donee, rather than an agenttrustee, or intermediary, if the donor explicitly grants the recipient entity variance power. For example, if the collections are for the benefit of cancer research, the recipient organization has variance power in that it has the ability to choose which specific charitable organization will be the recipient of the funds, an action which does not require the approval of the donor.

If the recipient organization has variance power, they should account for the receipt of funds by recording an asset and the corresponding contribution revenue, unless special circumstances apply. The beneficiary organization should not recognize any potential right to the assets held by the recipient organization until the beneficiary receives the contributions or they are unconditionally promised.

Special Circumstances

If the transfer of assets to the recipient entity with variance power is revocable, repayable, or reciprocal, then the donor retains control over the transferred assets. In this case, the transfer is not considered a contribution and shall be accounted for as an asset by the donor and a liability by the recipient organization.


When collecting funds on behalf of another organization, it is important to recall the special accounting rules that apply. Consider whether the funds are explicitly designated for a specified beneficiary or whether the entity receiving the funds has the power to decide where the funds will go once collected. If acting as an agent or intermediary, a recipient organization should report an asset and corresponding liability before the funds are transferred to the beneficiary. However, with variance power, the recipient organization will record the contribution revenue for the funds raised.

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