The Financial Accounting Standards Board issued FASB Staff Position (FSP) No. FAS 117-1, Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures for All Endowment Funds, on August 6, 2008.

FSP No. FAS 117-1 provides guidance on classifying the net assets associated with donor-restricted endowment funds held by organizations subject to the Uniform Prudent Management of Institutional Funds Act (UPMIFA), which serves as a model act for states to modernize their laws governing donor-restricted endowment funds.

The FSP is effective for fiscal years ending after December 15, 2008. The guidance was approved by the FASB at a June 24 meeting, where Board members discussed classification, disclosure requirements, guidance, and the effective date.

Footnote 4 of paragraph 13 in FASB Statement of Financial Accounting Standards (SFAS) No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations, was amended to explain the UPMIFA changes.

FSP No. FAS 117-1 also requires additional disclosures about endowments for both donor-restricted funds and board-designated funds for all organizations, including those that are not yet subject to an enacted version of UPMIFA.