Adapting to Credit Loss Reporting Rules: What Nonprofits Need to Know

ARTICLE | March 28, 2025

Authored by Vasquez + Company

For many nonprofits that adhere to Generally Accepted Accounting Principles (GAAP), adjusting to evolving financial reporting rules can be a significant undertaking. One of the latest changes in this arena is the requirement to use Current Expected Credit Loss (CECL) methodologies, as outlined by the Financial Accounting Standards Board’s Accounting Standards Update (ASU) 2016-13. While some organizations have been aware of this change for quite some time, the standard’s impact on not-for-profits became especially relevant from calendar year 2023 (and fiscal year 2024) onward. If your nonprofit has only recently switched to GAAP or if you are generally less familiar with credit loss reporting, understanding why CECL matters—and how to implement it properly—could have a direct impact on your organization’s financial clarity and regulatory compliance.

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