If you cannot find a nonprofit’s Statement of Activities, you can also ask the organization for a copy. Nonprofits unwilling to share this information should be questioned about their reasons for lack of transparency. Since many of your expenses will cover salary, insurance, rent, utilities, events, technology, etc., you may find that your restricted funds are higher than unrestricted ones. Once you have the change in net assets, you can compare revenue and expenses by significant program activity (or function) to see exactly where you are making or losing money. 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. And a little “profit” helps build your operating reserves to help you survive a slow-fundraising quarter or unexpected expenses.
- Get our FREE GUIDE to nonprofit financial reports, featuring illustrations, annotations, and insights to help you better understand your organization’s finances.
- 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.
- This calculation shows the equity of your nonprofit organization and whether you have the revenue to cover expenses, creating a sustainable organization.
- Statement of Activities is part of your nonprofit’s accounting requirements and is often included in its annual report or audited financial report.
- These can include expense tracking, time tracking, funds use, and more.
A Statement of Activities shows whether an organization made a profit or a loss during a period of time. It is a financial snapshot that can be used to track the organization’s financial progress. 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. There are a few different ways that you can create a nonprofit statement of activities.
How can a statement of activities improve my nonprofit organization?
The auditors also make the statements interesting and target them to Save the Children’s English donor base. The inclusion of the text and photographs in Wellington Zoo’s annual report further encourages trust in the organization. Code for Science & Society depicts their financial expenses on this page of their report rather concisely and transparently. You must share this at the beginning of the year and the end of your financial period.
The statement of activities is simply to show how the organization is using its revenue and expenses to support its mission. Statement of Activities is part of your nonprofit’s accounting requirements and is often included in its annual report or audited financial report. If you’re starting a new nonprofit, a statement of activities is one of the 4 financial reports you must file. A Statement of Activities includes revenue and expenses during a nonprofit’s reporting period (a fiscal or calendar year) and gives an overview of the changes to an organization’s net assets during that time. Out of the four most common financial statements in a nonprofit, the Statement of Activities, also known as the Profit & Loss (P&L), is the broadest.
- By examining your previous financial performance, you can identify trends, assess the effectiveness of revenue sources, and make informed projections for future periods.
- As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
- The surplus or deficit shown in the Statement of Activities represents the change in your nonprofit’s net assets over the specified period.
- This helps improve your impact while also operating transparently with respect to the portion of your funds that go to your mission compared to overhead expenses.
- The statement of activities report shows nonprofits how much money they have and how it is being used.
You can use the information in this statement to better understand if now is the right time to cut expenses, provide membership discounts, or secure additional funding through grants or sponsorships. Restricted revenue for a nonprofit is revenue that is to be used to a particular purpose. Those revenues are to be set aside for particular expenses of the nonprofit. Unrestricted revenues can be used for any legal expenses that a nonprofit might have. When asking for donations or funds, nonprofits are required to ask donors if they would like their donations to be restricted or unrestricted funds.
Nonprofit Accounting Standards
That means your revenue will also include any donations pledged in the period (whether you collected the cash or not) and any receivables (for services rendered but not yet paid). After working in the nonprofit financial management industry for 35 years, I see a difference when organizations use their numbers to make mission-driving decisions. That’s why I started GrowthForce—to serve the overlooked group of nonprofits. With a powerful back office, you can start learning how to leverage your numbers to make data-driven decisions. These decisions can cut costs, generate the biggest ROI, and lead your nonprofit to a healthier, more impactful future.
Other Resources
Even though it’s not an “official” report since it reflects projections instead of actual numbers, a budget is one of the most important financial tools in nonprofit financial management. It helps you set goals and stay on track while anticipating and planning for potential problems. One way to stay on top of ebbs and flows this year is using a helpful Nonprofit Budget Guide. In addition to including official financial reports, your annual report should tell the last year’s story of your organization.
Let’s dive in to learn more about the specifics of your nonprofit statement of activities. Nonprofits may receive donations that donors, corporations, or foundations wish to use on specific programs or expenses. Nonprofits must follow all donor requests, and these donations must be listed under restricted funds on a Statement of Activities. It includes donations, grants, fundraising, earned revenue, government funding, and special events.
The other thing that FASB 117 requires of nonprofit entities is reporting of expenses by functional classification. This means that a nonprofit statement of activities should have at least two categories. Want to know the best way to improve cash flow for your organization? Sustainer programs not only offer your organization a more predictable revenue stream that makes cash flow forecasting a breeze, but they can also bolster your nonprofit with many other benefits.
The Structure of a Nonprofit’s Statement of Activities [with Example]
Every nonprofit’s statement of activities will look a little bit different. If you haven’t seen one for your organization yet, or want to try your hand at compiling one, use the following template to get started. As you can see, the report is divided into the revenue and expenses along the vertical axis. Horizontally, the revenue and expenses are further categorized by restrictions placed on the funds.
Nonprofits must file four statements every year to comply with IRS rules. Most nonprofits use these statements in their annual or impact reports. Your nonprofit works to accomplish its mission, and when it setting the time period for a report comes to communicating that to donors and external stakeholders, no document is as helpful as a statement of activities. Overall, the statement of activities is an essential tool for nonprofit leaders.
By understanding its contents, you’ll be better positioned to sustain your organization in the long term. This statement is important for nonprofits because it helps to determine where changes can be made to fund necessary projects. The statement of activities is also important for nonprofits because it can help companies plan their resources and track their progress. 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.
What is the statement of activities?
Once that time period lapses or the purpose of the funds is fulfilled, those funds can be used for something else. This is no longer relevant, but it might be useful in looking at historical nonprofit statement of activities. Since their mission isn’t to operate for profit, they don’t need to show a profit statement.
Unrestricted funds can be used where your nonprofit needs them most. All revenue sections from your organization must also be split between unrestricted and restricted funds. If your nonprofit provides and charges people fees for their services, you can also report this revenue on your Statement of Activities. Organizations can also use this report to educate board members and staff leadership on financial needs and opportunities.