This includes things such as your non-profit’s bank statements, tax returns, and investment statements. Once you have all of this information, you can start creating your statement of activities. Lastly, the statement of activities accounting services for nonprofit organizations is often required by funders and regulatory bodies for reporting and compliance purposes.

Reporting of expenses.

The main thing is to stick with the same reporting period consistently, so the financial analysis stays accurate and easy to compare over time. To learn even more about nonprofit financial reporting basics, as well as other fund accounting tips, check out our Accounting Fundamentals Revisited webinar series. Ultimately, the statement of activities affirms your organization’s long-term sustainability, because good planning and financial accountability are a strong basis for attracting new donors. Furthermore, a statement of activities gives you another opportunity to be transparent and accountable to your donors.

Non-Profit Organization Statement of Activities Template

Unrestricted revenue is the most flexible type of revenue and can be used for any purpose within the organization’s mission. It typically includes donations or grants that do not come with any donor-imposed restrictions. Moreover, the statement of activities serves as a valuable tool for internal decision-making. Nonprofits can use the information in the statement to evaluate the financial viability of different programs and initiatives.

Nonprofit statement of activities

• Improved financial management can help your nonprofit organization better plan for the future, and track its progress over time.
• It is akin to the income statement used by for-profit entities but tailored to meet the unique needs of nonprofit accounting.
• 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.
• However, if $15,000 of your revenue is restricted, you’re actually $5,000 in the red and should cut expenses to maintain a sustainable organization.
• The Statement of Activities tracks your nonprofit’s income and expenses, showing financial performance over time.
• The Statement of Activities is used by nonprofits to file Form 990 with the IRS (Internal Revenue Service).

Management and general expenses support the overall administration and infrastructure of the organization, including salaries of administrative staff, office rent, and technology costs. Fundraising expenses encompass activities dedicated to securing financial resources, such as direct mail campaigns, grant writing, and fundraising events. Distinguishing these categories allows for a clear assessment of resource allocation between mission-related activities and supporting functions. No, the Statement of Activities is one of several essential financial statements for nonprofits.

Nonprofit Statement of Activities: A Comprehensive Guide

Keep in mind that the precision and accuracy of these figures are essential for a clear understanding of your organization’s financial health and operations. For this example, we see the change in net assets between 2021 and 2020 (far right) for operating expenses. As this is a large report, there are additional pages describing the total change in net assets. This means that the Statement of Activities reports on all the revenue earned, expenses incurred, and changes in net assets within this annual period. Your organization must also list expenses on your Statement of Activities report.

If you already organize your financial transactions into those 2 parts, https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ you can map it to one year report using this template. Your accountant or accounting staff must closely monitor and record donations according to GAAP. Promises of future donations should be recorded upon receipt of the pledge rather than when the donation is received. Whether you’re obtaining money from a private foundation, or from the state and federal governments, you are required to record your grant income in your Statement of Activities. Funds coming in to the nonprofit are recorded when an invoice is sent out rather than when the payment itself is actually received. This article is for informational purposes only and should not be considered financial advice.

• Or, one person could be responsible for handling fundraising cash, while another takes charge of bank statements.
• 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.
• Misinterpreting these restrictions can lead to the improper recognition of revenue and restricted net assets, skewing the report on available funds for designated activities or projects.
• This means that the Statement of Activities reports on all the revenue earned, expenses incurred, and changes in net assets within this annual period.
• Effective allocation of fundraising expenses is crucial for understanding the return on investment for these activities.
• The purpose of the nonprofit statement of activities is to provide details about transactions of the nonprofit entity how those transactions are providing for the organizations various programs and services.

Nonprofit financial statements typically include a statement of activities, a statement of financial position, a statement of functional expenses, and a statement of cash flow. For nonprofit organizations, transparency and accountability are not just regulatory requirements but are vital for gaining and maintaining the trust of donors, members, and stakeholders. A clear understanding of a nonprofit’s financial health is crucial for these entities to effectively manage resources, plan for the future, and communicate their financial status to interested parties. The Statement of Activities is a fundamental tool in this process, serving as a comprehensive report that provides a snapshot of the organization’s financial activities over a specific period. Gains and losses represent changes in net assets not resulting from core operational activities or owner contributions. Within a nonprofit’s statement of activities, these fluctuations provide a comprehensive view of financial performance beyond revenue and expenses.

Failing to Communicate Financials Beyond Spreadsheets

Additionally, the Statement of Activities can be used to determine the sustainability of your nonprofit’s finances which guides you into making long-term informed decisions. If you would like to learn more about nonprofit accounting, specifically the financial statements you need to compile, check out our blog. The statement of activities for your nonprofit organization provides an overview of the organization’s major activities and financial performance. The report can be used to improve fund-raising efforts by highlighting the different ways in which donations can be used to support your mission. By understanding the various sources of revenue and expenses, you can target potential donors and make more informed decisions about how to allocate resources.