Donated goods, services and volunteer time

A charity preparing accruals accounts recognises donated goods, facilities and professional services as income when their value can be measured reliably, with a matching expense or asset. Goods given for resale are recognised when sold if valuing them on receipt is impracticable. Ordinary volunteer time is not recognised at all, because FRS 102 treats it as incapable of reliable measurement; it is described in the notes and the trustees’ annual report instead.

What do the rules require?

The requirements sit in FRS 102 paragraphs PBE34.64 to PBE34.74, applied by Module 6 of the Charities SORP on donated goods, facilities and services, including volunteers. Module 6 applies in full to every tier under SORP 2026, which covers reporting periods starting on or after 1 January 2026, and the changes from the previous SORP are described as minor clarifications.

The starting point is paragraph PBE34.69: a resource is recognised only when its value can be measured reliably. Paragraph PBE34.69A then says what usually can be measured: donations of cash or goods, facilities such as free office accommodation or event space, and services that an individual or business usually provides for a fee as part of their trade or profession. Recognising a gift in kind produces income plus a corresponding asset or expense (PBE34.70B). Cash donations and grants are covered in recognising donations and grants; this page deals with everything given in kind.

How are donated goods for resale treated?

Charity shops are the classic case. Paragraph PBE34.70 accepts that for high volume, low value second hand goods it may be impracticable to estimate value reliably on receipt, so income is recognised in the period the goods are sold. The FRC’s basis for conclusions admits this departs from the accruals concept but is justified on pragmatic grounds, and says the same approach may be used by wholly owned subsidiaries in the group, such as a trading company that runs the shops.

Where valuing on receipt is practicable, the goods are recognised then at fair value. For goods expected to be sold, PBE34.73B allows the estimated resale value less the cost of selling them. The RSM FAQ published by ICAEW gives the example of high value boats donated to a sailing charity: with open market evidence of value, they are valued when received, not when sold. SORP 2026 adds that donated goods for resale recognised on receipt are shown as income from other trading activities, with the stock in the balance sheet.

Goods that are not recognised until sale still need a mention: PBE34.74(c) requires an indication of donated goods received but not yet recognised. For the VAT side of selling donated goods, see VAT on donated goods.

What about goods the charity keeps and uses?

Donated equipment, vehicles or furniture used by the charity are measured at fair value, usually the price the charity would pay on the open market for an identical or comparable item (PBE34.73B). Without that evidence, another valuation technique is used, which may draw on the donor’s cost. The income is recognised in full when received and the item is capitalised and depreciated like any purchased asset. The RSM FAQ confirms that boats gifted for ongoing use are valued at the point of donation. The tax treatment for the donor is covered in gifts of assets to charity.

How are donated services and facilities valued?

Services and facilities use a different measure from goods: value to the charity (PBE34.73(a)). Paragraph PBE34.73A defines this as the price the charity estimates it would have paid in the open market for a service or facility of equivalent utility. It may be less than market value:

• If the charity receives a premium service but would only have bought a standard one, it records the standard price.
• If it would not have bought the service or facility at all, the value is expected to be nil.

The RSM FAQ applies this to common situations. A free independent examination is a donation, because it is a service the charity would otherwise have to buy and its value can be measured; see independent examination. Office space larger than the charity needs is valued at the space it would actually have paid for. Where donated facilities and services are used immediately, an equal amount is shown as expenditure under the relevant heading, so there is no effect on net income. Free or cheap premises held under a lease have extra rules, set out in leases in charity accounts.

Why is volunteer time not included as income?

PBE34.69A states that contributions by volunteers, other than professional services usually provided for a fee, are expected to be incapable of reliable measurement and shall not be recognised. The FRC’s basis for conclusions (paragraph B34I.5) explains the reasoning. Valuing volunteer hours at a metric such as the minimum wage would ignore the organisation’s actual need for volunteers and would attach an arbitrary value that may not reflect a volunteer’s skills, experience or role, while any other method would be highly subjective.

The line is drawn by the nature of the service, not by who provides it. Paragraph B34I.6 says that where a service is given voluntarily and could be measured reliably because the charity would otherwise have had to pay for it, such as legal or financial advice, its value should be recognised. The RSM FAQ applies this to trustees: their time acting as trustees is not valued, but professional services a trustee provides that the charity would otherwise have bought from a third party are valued like any other donated service.

How should volunteers be reported instead?

• In the accounts. PBE34.74(c) requires an indication of other resources the charity has benefited from, giving unrecognised volunteer services as an example.
• In the trustees’ annual report. For an auditable charity in England and Wales, regulation 40(2)(b)(ii)(cc) of the Charities (Accounts and Reports) Regulations 2008 requires details of any significant contribution of volunteers to its activities. SORP 2026 also asks for more on the contribution of volunteers in the report.

Useful disclosure covers the number of volunteers, the activities they support and, where the charity records it, the hours given, presented as narrative rather than as a monetary figure in the statement of financial activities.

What does a worked example look like?

Illustration only. A food bank receives the following in a year:

Resource	Treatment
Van given by a local business, comparable second hand price £8,000	Income £8,000 and a fixed asset of £8,000, then depreciated
Free legal advice on a new warehouse licence that the charity would have bought for £1,500	Income £1,500 and legal costs £1,500
Warehouse space twice the size needed; equivalent space it would rent costs £6,000 a year	Income £6,000 and premises costs £6,000, assuming no lease arises
Bric a brac sold through its shop for £4,000	Income £4,000 when sold
60 volunteers sorting and distributing food	No figure in the accounts; described in the notes and the annual report

What mistakes come up most often?

• Putting a monetary value on general volunteer hours in the statement of financial activities.
• Valuing donated services or space at full market price when the charity would have bought less, or nothing.
• Omitting a free independent examination or pro bono professional work.
• Recognising charity shop stock on receipt without a reliable basis, or failing to disclose unsold donated goods.
• Forgetting the matching expense or asset, which overstates net income.

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Related Accountapedia entries

• Public benefit entities and concessionary loans
• Recognising legacy income in charity accounts
• Changes in the new Charities SORP
• Recognising Gift Aid in charity accounts
• Heritage assets accounting

Sources

• GOV.UK: Changes to charity accounting and reporting
• ICAEW: Summary of changes
• Financial Reporting Council: FRS 102 September 2024 tmKYWO6
• ICAEW: Income recognition charities sorp 2026 rsm faq
• legislation.gov.uk: SI 2008/629, regulation 40
• ICAEW: Sorp 2026 practical updates in action

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.