Nonprofit Organization Statement of Activities Report Template in Word, PDF, Google Docs Download

The statement of activities quantifies the revenues and expenses of a nonprofit for a reporting period. These revenues and expenses are broken down into the “Without Donor Restrictions” and “With Donor Restrictions” classifications that were referred to earlier for the statement of financial position. Overall, significant accounting policies play a crucial role in nonprofit financial reporting. They determine how financial transactions are recorded, reported, and disclosed, and they provide stakeholders with valuable information about the organization’s financial health and performance.

Safeguard Your Financial Integrity with Effective SOA Management

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. While there is no federal income tax return required for not-for-profit companies, they must still complete an annual return, called Form 990. And internally, by analyzing revenue sources and spending patterns you can identify which programs are thriving, which areas need more funding, and where you have inefficiencies. The primary purpose of the statement of activities is to satisfy regulatory requirements, such as Generally Accepted Accounting Principles (GAAP) and Form 990 for the IRS.

Statement of Activities (SOA): A Nonprofit’s Income Statement Equivalent

Nonprofits receive revenue from a number of different sources, all of which are essential to helping the organization pursue its mission. The majority of this revenue will be recorded as gross in your statement of activities. The changes in net assets section of the Statement of Activities gives stakeholders a clear picture of the organization’s financial health. Understanding these changes and trends can guide strategic decision-making, helping to ensure the organization’s long-term sustainability. Having a high level of financial transparency plays a key role in the sustainability and growth of any nonprofit organization.

Overview of the Importance of a Statement of Activities in Understanding a Nonprofit’s Financial Health

Loans and notes payable, through banks or individuals, are also listed in the liability section of the Statement of Financial Position. On your Form 990, the IRS requires you to report your financial information according to different rules than you use for your audited financial statements. It’s probably the most practical financial statement a nonprofit Executive Director or CEO has for making intelligent decisions for their organization. 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. To decide which basis is right for your organization, learn more about cash basis vs accrual basis accounting in nonprofits.

Best Practices for Mastering Nonprofit Financial Statements

Blue Avocado Accounting Procedures Manual Template is a great resource and guide for establishing accounting processes for your nonprofit. Broadly grouped expenses or revenues can obscure the allocation of funds across different programs. For instance, lumping all expenses under a https://nyweekly.com/business/accounting-services-for-nonprofits-benefits-and-how-to-choose-the-right-provider/ generic “operations” category hides the actual costs of specific activities, such as programming versus fundraising.

Federal Funding FAQ’s

It could be based on time — for example, a grant that is restricted to only a two-year program — or this could refer to endowment funds, where the principal can’t be spent, only the investment income. 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.

• They are essential for understanding the financial position and performance of a nonprofit organization.
• Providing this report to the public on the website or annual report can give transparency and instill trust.
• Regular review and analysis of this statement empowers organizations to adapt to changing financial landscapes, optimize resource allocation, and ultimately advance their missions.
• Nonprofit organizations often categorize their expenses into different groups to better understand where their resources are being allocated.
• The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 958 is another set of principles often used.
• In the for-profit world, they call the difference between revenues and expenses net income (or profit).

Here’s an example of a Statement of Activities that was a part of the organization’s audited financial statement in 2021 (page 5). You must share this at the beginning of the year and the end of your financial period. Temporarily restricted funds that must be held for a short period will accounting services for nonprofit organizations be unrestricted eventually, but they must be listed under restricted funds until then. Most nonprofits also apply for government, companies, or foundation grant funding. Organizations can also use this report to educate board members and staff leadership on financial needs and opportunities. Providing this report to the public on the website or annual report can give transparency and instill trust.

Conversely, a decrease in net assets, particularly unrestricted ones, can be a warning sign of financial distress, indicating that the nonprofit may be spending more than it is taking in. This could lead to cuts in programs, staff, and other critical areas if not addressed. Yes, you can add non-cash items like donated goods or services to the Statement of Activities. Nonprofits typically prepare their final Statement of Activities annually as part of their audit or review and make it publicly available.