For example, when comparing the major financial statements of a for-profit to a non-profit organization, you’ll notice that even though both are reports of financial value, they differ in title and motivation. A Statement of Activities will help nonprofits file Form 990 with the IRS and provide needed transparency to donors, foundations, and corporations. Websites like GuideStar will also use this report to share how your organization uses revenue. Complying with the generally accepted accounting principles (GAAP) will ensure that your nonprofit reports financial information accurately, transparently, and consistently.

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One of the main financial statements (along with the statement of comprehensive income, balance sheet, statement of cash flows, and statement of stockholders’ equity). The income statement is also referred to as the profit and loss statement, P&L, statement of income, and the statement of operations. The income statement reports the revenues, gains, expenses, losses, net income and other totals for the period of time shown in the heading https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ of the statement. If a company’s stock is publicly traded, earnings per share must appear on the face of the income statement. Nonprofit financial statements are formal records that provide a snapshot of an organization’s financial position, performance, and cash flows. They are vital tools for stakeholders to assess the financial health and sustainability of a nonprofit organization.

Understanding nonprofit financial statements and reporting

• We are now ready to present examples of the statement of financial position and the statement of activities.
• The total assets should always equal the total liabilities and net assets, as the organization’s assets are financed either by debt (liabilities) or equity (net assets).
• Insurance Expense, Wages Expense, Advertising Expense, Interest Expense are expenses matched with the period of time in the heading of the income statement.
• In addition to these statements, nonprofit financial reporting may also include notes to the financial statements.
• It will be easier for non-profits to fix and set their budget through the statement.
• And because it’s an internal report, you can set it up to show the information however is best for your team.
• Investing expenses are the purchases of long-term investments and any payments on long-term investments like buildings, land, equipment, etc.

You may also need to provide other information, like unrealized gains or losses on investments and noncash transactions, such as depreciation or amortization expenses. As with any financial statement, ensure that all figures are accurate and up to date before submission. (In most cases, this option is no accounting services for nonprofit organizations longer permitted.) Contributions received for fixed-asset acquisitions will be recorded as net assets with donor restrictions. The financial reporting model for not-for-profit organizations was established in 1993 under SFAS 117, Financial Statements of Not-for-Profit Organizations.

Guide to the Nonprofit Statement of Activities

• When you examine your nonprofit statement of activities, it should be clear that the line items in the statement match up with those in your organization’s budget.
• It means the organization is doing well and is able to continue its operations.
• This change should make it easier for not-for-profits to report investment activities and provide greater comparability among organizations using internal and external investment managers.
• The balance sheet provides a snapshot of the nonprofit’s assets, liabilities, and net assets, reflecting its financial condition at a specific point in time.

Fundraising can include anything that relates to marketing the organization and raising contributions, including expenses—office space, postage, copier use, and so on. Every dollar spent on a given program must be calculated to maintain accurate, compliant reporting. This data should ideally already be stored and readily available in your accounting software. An organized record-keeping system ensures your nonprofit can easily access key financial data when the time comes to compile your financial statements.

Understanding Net Assets in the Statement of Activities

FastFund Nonprofit Accounting software helps you automate many parts of your nonprofit’s finance operation. It simplifies recording transactions accurately, managing data, and generating compliant financial statements. Consequently, it can help make informed decisions about how to allocate resources and manage risk and report performance transparently. Here’s an example of a fictional nonprofit organization’s financial statement (a.k.a. nonprofit balance sheet).