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Nonprofit’s Statement of Activities: with and without donor restrictions Business Forms

Insurance Expense, Wages Expense, Advertising Expense, Interest Expense are expenses matched with the period of time in the heading of the income statement. Under the accrual basis of accounting, the matching is NOT based on the date that the expenses are paid. Since a nonprofit organization does not have owners, the third section of the statement of financial position is known as net assets (instead of owner’s equity or stockholders’ equity).

• If most of your funding is restricted, you may want to either negotiate less restrictive terms or consider new forms of donations.
• That means its one financial document every nonprofit needs to be familiar with, even if you’re too small for an audit or struggle to pull together an accurate Statement of Activities every quarter.
• This is an important part of a non profit financial statement template excel.
• A Statement of Activities shows whether an organization made a profit or a loss during a period of time.
• Before we illustrate a sample statement of activities, let’s take a closer look at its components.
• The Nonprofit Statement of Activities is an essential financial document that offers a comprehensive view of an organization’s financial status.

Don’t Jeopardize Your Nonprofit Compliance with a Commercial Accounting System

If the nonprofit’s board of directors designates some of the nonprofit’s unrestricted assets for a specific purpose, those assets must continue to be reported as net assets without donor restrictions. Developing and enforcing robust internal controls is key to safeguarding financial accuracy. These controls should include clear procedures for recording transactions, reviewing financial reports, and approving expenditures.

Key Financial Ratios for Nonprofits

Nonprofit organizations rely heavily on financial reports to make informed decisions about their operations. Nonprofits must file financial statements with the IRS to follow compliance laws, which is not the only reason they should include these activities. Your nonprofit must include natural and functional classifications for all expenses. Organizations will separate these expenses by programs, fundraising, and management. The results of each successive fiscal year’s financial activities accumulate on the SOFP, changing the net asset balances. Repeated annual deficits in the SOA will result in an accumulated deficit on the SOFP.

Nonprofit Organization Statement of Activities Template

It’s useful for staff members, donors, and board members who rely on this data to make informed decisions about your nonprofit. 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. This financial statement reports the revenues and expenses and the changes in the amounts of each of the classes of net assets during the period shown in its heading. This statement is issued by a nonprofit instead of the income statement issued by a for-profit business.

• The Statement of Financial Position is a snapshot of what your organization owns and what it owes to others at a specific point in time.
• They come from generous individuals who believe in the organization’s mission and want to make a difference.
• Websites like GuideStar also show a nonprofit’s Statement of Activities and use these details to award seals of approval.
• To learn more about nonprofit accounting check out our nonprofit accounting standards page.

It reflects the difference between revenues and expenses over a specific period. This section will delve more deeply into the key components that make up a Nonprofit Statement of Activities. Understanding these elements thoroughly is essential for comprehending a nonprofit organization’s financial health and operational efficiency. Even though you don’t have to https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ pay federal taxes, almost all nonprofit organizations (the few exceptions are listed here) must file an IRS Form 990 each year. Accrual basis accounting means that you record revenues and expenses when they are incurred or earned.

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