By: Flaka Ismaili    October 1, 2021

You can include all restricted funds together or segment them by donation type. In the for-profit world, they call the difference between revenues and expenses net income (or profit). The Statement of Activities shows users how much money the organization earned and spent over a specified time period. The report can be generated to show an entire year of the activity or one month at a time. In analyses where budgets or forecasts are used, the planning data most often originates from in-house Excel spreadsheet models or from professional corporate performance management (CPM/EPM) solutions.

These financial statements are interrelated — one cannot exist without the other. 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. SFAS 117 is the primary guidance related to nonprofit financial statements.

Why Your Nonprofit Needs to Report a Statement of Activities

The basis of Form 990 is the statement of activities and a statement of functional expense. Your nonprofit works to accomplish its mission, and when it comes to communicating that to donors and external stakeholders, no document is as helpful as a statement of activities. Nonprofits typically prepare their final Statement of Activities annually as part of their audit or review and make it publicly available. However, organizations should generate it internally more often, such as monthly or quarterly, to monitor financial performance more closely. If you haven’t seen one for your organization yet or want to try your hand at compiling one, use our template to get started.

• Compared with Wellington Zoo, the financial statements used in this report are easier to follow and provide fewer details.
• Nonprofits use the statement of financial position to list their assets, liabilities, and net assets.
• Nonprofit financial statements are useful to donors and contributors to show that your nonprofit has efficiently allocated resources.
• While it takes money to start a nonprofit, it doesn’t have to be YOUR money.
• SFAS 117 is the primary guidance related to nonprofit financial statements.
• Because restrictions on revenue are a key element to be recorded in your statement of activities, let’s explore them a bit further.

It is a financial snapshot that can be used to track the organization’s financial progress. Sharing these 3 sections with donors provides transparency and helps them understand where their donation goes. Websites like GuideStar also look at these reports when choosing which nonprofit to award their platinum and gold seals of approval. You can also show these expense amounts and percentages on your website. Program services, management expenses, budgeting, financial and administrative fees.

Business Form

The surplus or deficit shown in the Statement of Activities represents the change in your nonprofit’s net assets over the specified period. A surplus indicates that your revenues exceeded your expenses, resulting in an increase in net assets, while a deficit implies that your expenses were higher than your revenues, leading to a decrease in net assets. The Statement of Activities focuses on revenues, expenses, gains, and losses over a specific period, providing insights into financial performance.

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

You may choose to break down your revenue into additional categories, such as Sources of Unrestricted Donations and Federated Campaigns. Save the Children adds these financial student loan interest deduction statements and a letter from the independent auditor when providing financial reports. The following 3 nonprofits have included financial statements in different ways.

Where to find nonprofit financial statements?

MIP Fund Accounting® allows you to easily generate a statement of expense with its 130-plus pre-built reports and custom report-builder. Show your organization is on track to accomplish its mission, and that it handles donor funds responsibly. This section outlines the various sources of income your nonprofit receives, such as donations, grants, program service fees, membership dues, and investment income. It is crucial to categorize revenue types to gain insights into the sustainability of funding sources. To make this process easier, we recommend that your organization partner with a nonprofit accountant like the experts at Jitasa. Our team will meet you where you are in compiling your statement of activities, analyze your financial data, and make tailored recommendations to improve your revenue and expense allocation going forward.

What is a nonprofit Statement of Activities?

Since their mission isn’t to operate for profit, they don’t need to show a profit statement. They do need to show how they are using their revenues and expenses to achieve their mission. It is common knowledge that businesses must pay taxes and file a federal income tax return each year, but for tax-exempt organizations, compliance requirements are different.

Gross receipts are the primary difference between nonprofits and for-profit companies filing a statement of activities. Nonprofit financial statements are similar to the financial statements for-profit businesses file, but there are some key differences to keep in mind. There are four financial statements nonprofits must file every year to remain in compliance with the IRS. But don’t fret – although it sounds complicated, these standard financial statements are easy to compile with the right tools and guidance. In this article, we’ll walk you through the four types of statements and show you some examples of how other nonprofits handle their financial statements. No matter what option you choose, you need to gather all your financial information before you can create a nonprofit statement of activities.

The revenue section contains a breakdown of the major sources of revenue, such as contributions, program fees, membership dues, grants, investment income, and amounts released from donor restrictions. Understanding your finances and resources is extremely important to a nonprofit, because it provides insight as to whether or not you have the required resources to fulfill your mission. Today we are going to examine and learn how to understand your Statement of Activities, or Statement of Income and Expenses. Compared with Wellington Zoo, the financial statements used in this report are easier to follow and provide fewer details. Heliconia Scholarship Foundation shares a financial report with its donors instead of an annual report. This decision makes sense since donors to a scholarship fund are likely concerned solely with financial details from this organization.

Here’s an example from Code for Science & Society’s Statement of Financial Position from 2021. Our subsequent examples of other statements will be from this same report. While it takes money to start a nonprofit, it doesn’t have to be YOUR money. Tom is a multi-disciplined leader with over a decade of experience in nonprofit operations, technology leadership in government, and over two decades of servant leadership.

This calculation shows the equity of your nonprofit organization and whether you have the revenue to cover expenses, creating a sustainable organization. Also included in your restricted revenue is temporarily restricted revenue. After that time elapses, they can be released from restriction and used as the nonprofit sees fit. 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.

Flaka Ismaili

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