How to write a statement of activities for a nonprofit grant proposal

Accurate data, clear categorization, and consistent reporting periods are essential for providing valuable insights to stakeholders and supporting effective decision-making. The nonprofit statement of activities is one of the core accounting documents that your organization creates. It allows you to see how your organization uses its funding to advance its mission and allocate resources.

Program service revenue

• While functionally similar, the terminology reflects the unique goals and nature of nonprofit organizations.
• An unconditional contribution depends only on the passage of time or a demand by the recipient organization for payment.
• This financial report provides a comprehensive view of a non-profit’s revenues and expenses.
• For instance, a high fundraising expense ratio might indicate inefficiencies in fundraising strategies.
• In the for-profit world, these are called a Balance Sheet an Income Statement.

Furthermore, readily available examples can guide organizations in accurately categorizing their financial activities, promoting transparency and accountability. Out of the four most common financial statements in a nonprofit, the Statement of Activities, also known https://www.bookstime.com/ as the Profit & Loss (P&L), is the broadest. The P&L covers all the organization’s programmatic, fundraising, and administrative expenses incurred during the period.

QuickBooks Support

• You can identify trends, assess the effectiveness of revenue sources, and make informed projections for future periods.
• Encouraging a culture of regular financial review within the team will also help you catch discrepancies and address them promptly.
• To calculate Net Assets, you start by summing all sources of revenue, including donations, grants, investment income, service revenue, sales, special event income, and any other revenue streams.
• It’s important to find the balance between reducing overhead to fund your mission and ensuring you dedicate enough funding to your operating activities to continue growing and expanding your organization.
• You can use the information in this statement to better understand if now is the right time to cut expenses, provide membership discounts, or secure additional funding through grants or sponsorships.
• The Statement of Activities is the core financial document that chronicles a non-profit organization’s performance over a specific fiscal period.
• Accurate data, clear categorization, and consistent reporting periods are essential for providing valuable insights to stakeholders and supporting effective decision-making.

Understanding these elements thoroughly is essential for comprehending a nonprofit organization’s financial health and operational efficiency. In general, the Statement of Activities is required to paint a holistic picture of a nonprofit’s financial health and ensure fiscal transparency in its operations. The results of each successive fiscal year’s financial activities accumulate on the SOFP, changing the net asset balances. Repeated annual deficits in the SOA will result in online bookkeeping an accumulated deficit on the SOFP.

Exhibit 3

If you would like to learn more about nonprofit accounting, specifically the financial statements you need to compile, check out our blog. Not-for-profit organizations are also required to present a statement of functional expenses or to include a matrix of natural and functional expenses in the notes. This requirement fosters transparency, allowing donors, regulators, and other users to see where money is spent in terms of both type and purpose. The matrix typically has columns for program services, management, and fundraising, and rows for natural classifications such as salaries, benefits, rent, etc. A Statement of Activities is a financial statement commonly used by nonprofit organizations.

• We commonly see the following items classified in the nonoperating section.
• Using an example from a company, let’s say ABC Corporation wants to plan its upcoming year.
• If you need help or have any other accounting concerns, book a free consultation with a Velu CPA expert today.
• All of a nonprofit’s funds should be reinvested into the organization and its mission.

The revenues and expenses in this report are broken down by unrestricted funds and funds with restrictions placed on them by donors, using separate columns across the statement. Though it is possible to compress these rows down to just a few line items, it is customary to be more expansive in detailing revenues and expenses. It provides transparency into how a nonprofit manages its funds, aiding in accountability to donors, board members, and stakeholders. It also helps the organization analyze its financial health and sustainability. Financial activities result in either a surplus (increase) or shortfall/deficit (decrease) in the organization’s net assets shown on the Statement of Financial Position (SOFP).

What is temporarily restricted revenue?

However, the benefits of being transparent in your financial activities go much deeper. For instance, an environmental conservation mission could include forestry, wildlife preservation, or educational initiatives. Find out what statement of activities it takes for nonprofit finance teams to not only survive but thrive with our Ebook survival guide.

SAO Annual Report Schedules

When a donor restriction is satisfied—e.g., the not-for-profit completes a program funded by a restricted grant—the entity “releases” these net assets to the without donor restrictions column. The amount of detail, however, is more extensive in the fund-based financial statements. For example, the statement in Exhibit 17.1 uses only two accounts to describe capital assets whereas Exhibit 17.5 uses seven. Thus, as disclosed on this statement, the taxpayers of that city had to bear the financial burden for police protection of more than $89 million (see point A).