Statement of Activities in Nonprofit Accounting

While the Statement of Activities examines your revenue and expenses, this document focuses on your assets, liabilities, and net assets, offering a broader view of your organization’s financial status. The Statement of Activities helps you assess operational efficiency and determine if your organization is operating within its means. It also provides transparency for stakeholders, donors, and board members, ensuring they understand how funds are utilized to advance your mission. The Statement of Activities lets you evaluate whether your organization is earning more than it spends, providing a snapshot of your financial health. By breaking down revenue and expenses, this report shows how efficiently your organization is using resources to support your mission. Revenues may include income from the sale of goods and services, rental income, donations and dues, grant revenue, and any other monies collected.

Inventory Templates

Investing expenses are the purchases of long-term investments and any payments on long-term investments like buildings, land, equipment, etc. This article is for informational purposes only and should not be considered financial advice. These articles and related content is the property of The Sage Group plc or its contractors or its licensors (“Sage”). Please do not copy, reproduce, modify, distribute or disburse without express consent from Sage.These articles and related content is provided as a general guidance for informational purposes only. These articles and related content is not a substitute for the guidance of a lawyer (and especially for questions related to GDPR), tax, or compliance professional.

Expenses

• A nonprofit statement of activities is a financial statement that shows the  income and expenses of your nonprofit over a period of time.
• Secondly, the statement provides transparency and accountability to the organization’s stakeholders, such as donors, board members, and the general public.
• This ensures a lasting impact, providing a steady stream of income to support the nonprofit’s mission over the long term.
• They represent the resources consumed by the organization in carrying out its mission and daily operations.
• 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.

In this guide, you’ll learn about the four key statements every nonprofit needs, how to prepare them, and which financial ratios are most helpful. Narratives should succinctly highlight achievements, financial strategies, and future plans in layman’s terms, while dashboards provide a visual summary of trends, ratios, and key indicators at a glance. This integrated approach illustrates your organization’s impact in a more relatable, holistic way. Encouraging a collaborative effort between financial and programmatic departments is key to crafting a comprehensive and compelling financial narrative. Nonprofits typically prepare their final Statement of Activities annually The Key Benefits of Accounting Services for Nonprofit Organizations 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.

• By understanding the key components and importance of this statement, nonprofits can effectively manage their financial resources and work towards achieving their mission and goals.
• A nonprofit’s expenses usually include all cash flowing out of the organization during the period.
• In addition, your income statement can be used to determine how sustainable your organization’s finances are so you can make informed decisions for the future.
• That means must use accrual-basis accounting and record transactions in a specific way.
• It reflects the difference between revenues and expenses over a specific period.

How do SOAs Help Organizations?

Ideally, you would have far more assets without restrictions than with restrictions. Internally you should https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ create and use reports that give you the information you need to run your business effectively. That might mean using cash-basis accounting, tracking your gains or losses at the program level, or more. 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. The statement of activities will also influence Report 990 generation when it comes time for tax season.

• Between your statement of activities and statement of functional expenses, you’ll be all set to file your Form 990 accurately each and every year.
• Income generated from services aligned with your mission, such as tuition fees, ticket sales or workshop fees.
• It is a financial snapshot that can be used to track the organization’s financial progress.
• Since their mission isn’t to operate for profit, they don’t need to show a profit statement.
• Nonprofits must compile an income statement every year to be in accordance with the Generally Accepted Accounting Principles (GAAP).
• This is no longer relevant, but it might be useful in looking at historical nonprofit statement of activities.

• With just a glance, it’s easy to see that 85% of total expenses were program-related and that the majority (29%) of operating revenue came from individual contributors.
• Or help you understand why your cash increased even as you lost money that quarter (maybe you dipped into your line of credit to make payroll).
• Financial management systems built for nonprofits not only automate the reconciliation process but also provide detailed tracking and reporting capabilities for restricted fund management.
• Let’s navigate these challenges together, with precision, foresight, and the shared goal of creating lasting social good.
• Nonprofits have essentially parallel reports, but because their accounting is different, the reports differ slightly as well.
• 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.

Their expenses prioritize program services as part of their mission, followed by supporting services such as fundraising and indirect costs. The expenses, revenues, and changes in net assets help the management achieve important objectives. It lists crucial financial KPIs for a specific period, such as revenue, expenses and overall financial performance.

What is Included in a Nonprofit Statement of Activities?

The net asset section of the Statement of Activities is thus not just a reflection of past and present financial status but also a guide to potential future challenges and opportunities. A statement of activities is a financial document nonprofits use to report performance over a defined period. It’s important that you make sure that all relevant staff are well educated in how to prepare a nonprofit statement of activities.