The Statement must include a statement of the assets and liabilities of the corporation in the form of a balance sheet and a statement of revenues and expenditures. The first and most desired financial statement is the statement of financial position. Nonprofits use this statement to share what their organization owns and what it owes. Nonprofits must comply with the IRS and file four financial statements to ensure they follow strict nonprofit regulations. Many of these statements are similar to what for-profit businesses file, but some significant differences exist. Nonprofit financial statements aren’t just helpful – they’re required by the IRS.
Understanding the Net Assets Section
This allows readers to easily understand the composition of the organization’s net assets and the overall financial position. The information presented on the statement is also required when a nonprofit is applying for tax exemption with the Internal Revenue Service (IRS). Statements of Financial Positions are used internally to analyze financial health and make decisions about the organization’s ability to start new programs, make large purchases, or expand.
Other Free Social Services Templates
In addition to our free support while you fill out the template, you also receive a complimentary review of your completed projections with your purchase. So, you can have one of our experts double check your work to make sure your projections are ready to go. Our one of a kind template, process, and support make creating projections easy, fast, and ready for exactly what you need. All https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ resources are available for immediate download after you sign up for a Free Tools account in the Case Management Hub platform.
Statement of Activities
Hopefully, you now have a better understanding of each type of statement and how to prepare them. Nonprofits use the statement of activities to review changes to their net assets and show revenue and expenses over the accounting year. In other words, it tracks your nonprofit’s financial performance and shows how you’ve used your funds to support your mission. The Statement of Activities, also known as the income statement, shows the revenues, expenses, and changes in net assets of a nonprofit organization over a specific period. It provides information on the organization’s financial performance and the sources and uses of funds.
Double-Checking All Data Entries
- Understanding the core principles around nonprofit revenues empowers leadership to make smart funding decisions and set their nonprofits up for sustainable success.
- Compared with Feeding America and Save the Children, the financial statements used in this report are easier to follow and provide fewer details.
- Understanding liquidity is important to understand how flexible and responsive an organization can be.
- Contact us if you have any questions about our free simple non-profit budget template or any other budget template for non-profit organizations.
- The ultimate guide to selecting the best accounting and financial management software for your nonprofit.
- By understanding your current assets and liabilities, you can assess liquidity and solvency and evaluate whether your nonprofit has enough resources to meet both short-term obligations and long-term goals.
- As a fractional CFO, he goes beyond routine duties, guiding organizations with strategic insights for sound financial decisions.
This report will show them which of your activities brought cash into your operation during the period and which expenses ate up large chunks of money. It is completely ok and acceptable to have multiple versions of your financial reports. The key here is to make sure the information is presented in an accurate and useful way. This is another format but is for presenting the figures of multiple years in the same Balance Sheet of a Nonprofit. This makes it very easy for anyone to run through the figures and understand the position of the organisation for the last few years. Also, a comparison can be easily made in terms of percentages for two successive years for easy analysis.
