One of the things you need to do when you’re running a nonprofit organization is to keep track of your financial statements. In this guide, we’ll explain what a nonprofit statement of activities is, why it’s important, and how to create one for your organization. Revenue includes cash inflow such as donations, grants, membership dues, and income from services or products offered by your nonprofit. Expenses, representing the cost of goods sold and operating expenses, are the costs your nonprofit incurs during its business operations, including program delivery and fundraising activities. Financial statements are not just for compliance and reporting—they should be used as tools for strategic https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ planning.
- Having an endowment ties up cash that is not accessible to the organization for operations or program delivery.
- If you’re ready to step up the financial reporting game at your nonprofit, give JFW Accounting Services a call today to learn how we can help.
- The Changes in Net Assets section of the Statement of Activities provides valuable information about the financial health and sustainability of a nonprofit organization.
- It provides a detailed overview of the organization’s financial transactions over a specific period, typically a fiscal year.
- The Statement of Activities provides detailed information about all the revenues received and expenses incurred by the nonprofit.
- And because it’s an internal report, you can set it up to show the information however is best for your team.
Why are cash flow statements important for nonprofits?
Consider using accounting software that is designed for nonprofit organizations. Many platforms offer features tailored to nonprofit financial reporting, helping you track income, expenses, net assets, and other financial metrics more easily. Automated systems also help with compliance and make it easier to produce accurate reports. A Statement of Activities details financial performance on nonprofit organizations throughout a fiscal year. It contains data on operating earnings, operating costs, non-operating revenues and expenses, and changes in net assets. Pledges, accruals (non-cash, long-term liabilities), depreciation, and subsidiary income and expenses are all included in this report.
Expenses
Unlike for-profit entities, nonprofits must adhere to specific accounting standards that ensure transparency and accountability to donors, grantors, and regulatory bodies. 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).
1 Cash donations
Since it is similar to an income statement it has revenues, expenses and a change in net assets. You must also break out the statement of activities into restricted and unrestricted. The nonprofit statement of activities is one of the primary nonprofit financial statements. It is basically the nonprofit income statement because nonprofit entities do not have an income statement. Financial transparency and proper financial accounting services for nonprofit organizations management are essential in running a nonprofit organization. As a nonprofit executive or financial officer, understanding nonprofit financial statements is key to making informed decisions and ensuring your organization remains sustainable and compliant.
Compared with Feeding America and Save the Children, the financial statements used in this report are easier to follow and provide fewer details. You’ll use the statement of financial position to list your assets, liabilities, and net assets. Instead, you’ll be reporting on net assets and how you use funds to advance your mission. A complete set of financial statements can help reveal your organization’s strengths, weaknesses, and areas for opportunity.
- A statement of activities quantifies the revenues and expenses of a nonprofit entity for a reporting period.
- Contact Jitasa’s team of nonprofit accountants to compile your statement of activities.
- It provides a detailed summary of the organization’s financial activities, revenues, and expenses over a specific period of time.
- By doing so, they can demonstrate their financial stability and attract potential donors and funders.