Memberships as Earned Revenue???

Suzanne Smith:
We're having a little disagreement with our finance department (it's budget time) about how the membership contributions should be accounted for. They insist that most organizations consider annual membership as earned revenue - even though we say it is tax deductible. Our higher levels are considered donations (not earned revenue) and the tax deductibility is listed according to the cost of tangible benefits. So, I'd appreciate some feedback on how it's done elsewhere. Thanks!

Suzanne,

I'm sorry this is so late a response!  It's been a hectic year or so.  Our non-profit foundation is a "membership" non-profit, with the membership fees eligible for deduction.  We consider the membership fees the same as donations, grants and fundraising proceeds (which we label as "Annual" income for the benefit of our Program Directors).  We also have earned income, from programs such as the price of the Lunch program tickets, the coffee and muffins sold in our lounge, the Home Bound Meals, sales of plants from the  Garden Group, etc.

Our auditors have never had a problem with recognizing the membership fees as contributions; and we've never had a problem with our 990 reporting to the IRS. 

Hope this is of some help, no matter how late!

 Melissa