Nonprofit Organization Statement of Activities Report Template in Word, PDF, Google Docs Download

Now you know the basics of the five essential financial reports that every nonprofit needs. Even though you don’t have to pay federal taxes, almost all nonprofit organizations (the few exceptions are listed here) must file an IRS Form 990 each year. For this reason, Net Assets are broken down into Restricted Net Assets and Unrestricted Net Assets on a nonprofit balance sheet. So you can see which assets you can use to offset your liabilities, if and when it’s necessary. Ideally, you would have far more assets without restrictions than with restrictions. If you or your board come from the for-profit world, it’s okay to call it a Balance Sheet among your team.

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• They help ensure that the organization is following accounting standards and reporting requirements.
• Conditional contributions come with specific stipulations that must be met before the funds can be recognized as revenue.
• It typically includes donations or grants that do not come with any donor-imposed restrictions.
• This report can help you explain to your board why you have less cash even after a great fundraising month (maybe you invested in some much-needed equipment).
• For instance, by dividing your total current assets by your total liabilities, you can calculate your current liquidity ratio.
• It gives insight into the organization’s financial performance and whether it is generating enough revenue to cover its expenses.
• Unrestricted net assets are funds that can be used at the organization’s discretion to support its mission and programs.

Net Assets, or the “change in net assets,” represents the difference between total revenues and total expenses for a given period. This figure indicates whether the organization has gained or lost resources during that time, directly impacting its overall financial position. The SOA details the revenue earned and expenses incurred during that period, as well as the resulting net position. For nonprofits, this net position is known as “net assets,” in contrast to the “net income” or “net profit” used by for-profit entities. While functionally similar, the terminology reflects the unique goals and nature of nonprofit organizations.

Template for Use

A nonprofit statement of activities example will have a heading, body, and bottom line. In conclusion, the Statement accounting services for nonprofit organizations of Activities is more than just a financial report; it is a vital tool that reflects the integrity and mission effectiveness of a nonprofit organization. By leveraging the insights provided by this statement, stakeholders can significantly enhance their impact on the organization’s success and longevity. This engagement not only benefits the nonprofit but also reinforces the overall health and vibrancy of the communities it serves. The Statement of Activities is essential for the robust financial management of a nonprofit. It allows stakeholders to assess whether the organization is on a solid financial footing and aligned effectively with its stated mission and goals.

The Structure of a Nonprofit’s Statement of Activities with Example

They provide insight into the organization’s overall financial health and stability. Understanding the composition of net assets is crucial for stakeholders to assess an organization’s financial position. Your nonprofit statement of activities is split into several different sections.

• No one wants to admit to making a mistake, so it’s better that you head off that possibility.
• Conversely, a significant portion of total expenses dedicated to program services demonstrates a strong commitment to fulfilling the organization’s mission.
• For instance, you might decide to focus on marketing matching gifts to generate the revenue you need to expand one of your core programs.
• These standards provide guidelines for proper financial reporting, including the preparation of the Statement of Activities.
• Firstly, it allows the organization’s management to track and analyze its financial performance.

The section on expenses can be just as illuminating as that on revenues for a nonprofit. As we mentioned, expenses tend to be divided into programs, fundraising, and management. It’s good bookkeeping to check that high expenses in a particular area are intentional. These should also be compared to revenue – if high amounts of money are being put into fundraising, with minimal returns, a different strategy may be in order. Financial activities result in either a surplus (increase) or shortfall/deficit (decrease) in the organization’s net assets shown on the Statement of Financial Position (SOFP). Net results are classified as either with or without donor restrictions per FASB (the Financial Accounting Standards Board).

Sustainability considerations

A typical nonprofit sees plenty of financial activity during a fiscal year—grants are awarded, fundraisers are hosted, donations are received, and expenses are paid. The nonprofit statement of activities serves as a financial summary, capturing all these monetary actions for a specific period, usually the fiscal year. The statement of financial position is similar to the balance sheet of a for-profit entity, except that a net assets section takes the place of the equity section that a for-profit entity uses. The net assets section breaks out net assets with donor restrictions and net assets without donor restrictions. You can use the insights from this nonprofit financial statement to guide your annual budget planning. Plus, this publicly available information can provide current and prospective donors with the context they need to decide whether they’d like to support your nonprofit based on how it employs its funds.

• A deficit, meanwhile, suggests there may need to be a hunt for new sources of funding or a reduction in costs.
• Nonprofit organizations play a crucial role in society by addressing various social issues and providing valuable services to communities.
• While the goal of a nonprofit isn’t to turn a profit, if you don’t bring in more than you spend, you won’t be able to survive.
• Internal users of financial reports include the organization’s management team, founder, Board Members, audit committee, and financial leadership.
• Velu’s services address the unique challenges faced by nonprofits and small businesses, fostering sustainable growth.

The way expenses are categorized and reported in the Statement of Activities is not merely a matter of financial recording but a reflection of the nonprofit’s operational priorities and efficiency. This section of the Statement of Activities plays a crucial role in how the organization is perceived by external parties and how it manages its internal operations to maximize impact on its mission. While your statement of activities shows the sustainability of your nonprofit, your statement of cash flows shows how money moves in and out of your organization. There are many moving pieces to success including managing people, fulfilling a purpose, and prioritizing events.

• The Notes to the Financial Statements provide additional information and explanations to the financial statements.
• Program service expenses directly relate to fulfilling the organization’s mission.
• Revenue represents all the funds a nonprofit has gathered over a specific period (generally the fiscal year).
• By comparing program services expenses with program accomplishments and outcomes, nonprofits can assess whether they are achieving their intended impact in a cost-effective manner.
• It also ensures that the nonprofit maintains its financial health and capacity to continue serving its mission effectively.

The nonprofit Statement of Financial Position, also known as a balance sheet, provides information as of a specific date about your organization’s financial health. This statement offers financial insights through your organization’s liquidity and financial flexibility—represented as assets and liabilities. Nonprofits must also provide a functional expense analysis, and many organizations choose to meet this requirement using a nonprofit Statement of Functional Expenses. In fact, nonprofit financial statements are so important that many nonprofit organizations will make their annual reports publicly available by sharing them on their website. Additionally, the section of additional disclosures may include information about related party transactions, contingent liabilities, and other relevant matters. These disclosures provide https://namesbluff.com/everything-you-should-know-about-accounting-services-for-nonprofit-organizations/ a comprehensive view of the organization’s financial position and help users of the financial statements make informed decisions.