Membership fees differ from a simple monetary donation in that the organization usually commits to providing something in return. This consideration may consist of members being entitled to certain services, products/benefits, or access to events, etc.

Regular donors who only receive, for example, newsletters or similar materials may be referred to as “members,” but contributions from these donors should (may) be treated for accounting purposes as funds raised or donations.

There may be a blurred line between members and regular donors (often referred to as supporting members). In this case, the organization must determine for itself where to draw the line. At the same time, it is important that the costs associated with the activity follow the same pattern as the revenue.

The classification of revenue determines how the expense is classified:
If revenue is classified as membership revenue, then costs associated with it must be classified as “(Other) Fundraising Costs.” If, instead, revenue is classified as fundraising/donations, then costs associated with the activity must be classified as “Fundraising costs.”

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Glossary – Activity-Based Accounting