What is the statement of activities?

This template provides a clear and organized way to present financial information, including revenues, expenses, and net change in financial position, by class, location, and project. 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. At the bottom of the report, there’s a section dedicated to the net assets of the organization.

Donations and contributions include funds or assets voluntarily given to your nonprofit by individuals, corporations, foundations, or other organizations. These contributions can be in the form of cash, securities, property, or in-kind donations, and they play a significant role in supporting your nonprofit’s activities and programs. This section outlines the various sources of income your nonprofit receives and should at the very least break it down by public support, earned revenues, and other revenues. Public support includes categories such as contributions/donations, donated goods, private grants, government grants, and indirect contributions. As we mentioned earlier, many nonprofits use these financial statements in their annual reports to show transparency and build trust in their organization.

We typically break revenue into two categories; contributed and earned. Your nonprofit Income Statement shows the year-over-year income and spending trends. And how those expenses relate to the work of carrying out your mission.

What will your CPA look for on your Statement of Activities?

Temporarily restricted funds that must be held for a short period will be unrestricted eventually, but they must be listed under restricted funds until then. Most nonprofits also apply for government, companies, or foundation grant funding. These gifts must be posted separately from cash and in-kind contributions. Nonprofits need a Statement of Activities to show how they can afford program and fundraising activities.

  • Nonprofits use the statement of financial position to list their assets, liabilities, and net assets.
  • The Business Register includes sole proprietorships, partnerships, and corporations reporting business activity to the IRS.
  • Online websites like Charity Navigator and GuideStar also use these reports to rate your organization.
  • By understanding where your money is coming from and going, you can make informed decisions about future expenditures.

Like all nonprofit financial statements, the central role of the Statement of Activities is to provide transparency and accountability to your donors and board. But it’s also an excellent tool for understanding just how healthy your business is. The most common source of measurement error was reporting in different units (e.g., reporting in whole dollars rather than in thousands of dollars).

Statement of Activities: Reading a Nonprofit Income Statement

The net effect of all revenues and expenses is a change in net assets, rather than the profit or loss figure found in the income statement of a for-profit entity. Save the Children adds these financial statements and a letter from the independent auditor when providing financial reports. Financial statements also help nonprofits determine the future of their organization. Board members can better understand the nonprofit’s capacity for growth. It also allows leadership to find potential financial opportunities and ways to address financial concerns.

Business Register data are compiled from a combination of business tax returns, data collected from the economic census, and data from other Census Bureau surveys. The Business Register includes sole proprietorships, partnerships, and corporations reporting business activity to the IRS. The EO BMF is a publicly available list from the IRS of all organizations that are exempt from filing federal income taxes. Understanding and effectively utilizing the Statement of Activities is crucial for nonprofit organizations to achieve financial stability and fulfill their mission. If you need assistance in creating a Statement of Activities tailored to your nonprofit or have any other accounting and financial concerns, book a free consultation with a Velu CPA expert today. Our dedicated team is here to support you in managing your nonprofit’s finances and achieving long-term sustainability.

Once again, this statement will show transparency and build trust with their donors. The following 3 nonprofits have included financial statements in different ways. Nonprofits can record revenue and expenses with a cash or accrual method. The primary reason for this is this method lets nonprofits record revenue when it’s earned. These statements also show your nonprofit is staying compliant with financial regulations.

Maximize Efficiency and Time Management for Nonprofits

To help you grasp the concept, let’s consider a hypothetical nonprofit organization. Here’s an example of what their Statement of Activities might look like. If you use accounting software, you’ll need to input all of the information manually. This can be time-consuming, but it’s not as expensive as hiring an accountant. The following is an example of a nonprofit’s statement of activities. Donorbox is an affordable and simple-to-use online fundraising tool with powerful fundraising features such as Recurring Donations, Crowdfunding, Peer-to-Peer, Events, Memberships, and more.

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Detailed descriptions of the adjustments for nonresponse are available in the Technical Notes. The Statement of Activities shows users how much money the factor definition organization earned and spent over a specified time period. The report can be generated to show an entire year of the activity or one month at a time.

It is important for a nonprofit to easily generate this statement to measure if each of their mission based programs has the resources necessary to operate efficiently and can be sustainable for the organization. The nonprofit Statement of Activities is one of the main financial statements of a nonprofit organization. The nonprofit statement of activities is one of the primary nonprofit financial statements. It is basically the nonprofit income statement because nonprofit entities do not have an income statement. 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.

Examples include rent, utilities, office supplies, salaries of non-program staff, and professional fees. There are a few different ways that you can create a nonprofit statement of activities. You can hire an accountant to do it for you, use accounting software, or do it yourself.

Investing expenses are the purchases of long-term investments and any payments on long-term investments like buildings, land, equipment, etc. Here’s an example from Code for Science & Society’s Statement of Financial Position from 2021. Our subsequent examples of other statements will be from this same report.

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