After subtracting your nonprofit’s liabilities from assets, you get your net assets. As you list net assets, you must also split them into unrestricted, temporarily restricted, and permanently restricted funds. Contact us today to get expert advice and assistance on how to master your nonprofit financial statements! Monitoring the movement of your net assets will allow you to make better financial decisions and ensure that your resources are used in the most effective way. The Statement of Cash Flows is one of the core external nonprofit financial statements required for an independent audit, so you should be familiar with it. For this reason, Net Assets are broken down https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ into Restricted Net Assets and Unrestricted Net Assets on a nonprofit balance sheet.

• A cash flow statement tracks the movement of cash into and out of your organization.
• Nonprofits must file financial statements with the IRS to follow compliance laws, which is not the only reason they should include these activities.
• Analyzing these trends provides a more dynamic view of your organization’s financial health.
• By sharing what funds you collect and how they’re spent, donors can see how their gifts support your nonprofit’s programs and beneficiaries.
• This statement will detail the expenses incurred during the reporting period and allocate it by program services and support services.

Crucial Financial Data for Nonprofit Leaders

Operating expenses are your employees’ salaries and the amount spent on equipment and supplies. Long-term liabilities are car loans and mortgages, whereas current liabilities cover accounts payable debt like salaries and immediate payments. “Smith & Howard” is the brand name under which Smith & Howard PC and Smith & Howard Advisory LLC provide professional services.

• A nonprofit organization (NPO) is an organization that has no owners and which uses its net income to help it achieve its established aims.
• One of the main financial statements (along with the statement of comprehensive income, balance sheet, statement of cash flows, and statement of stockholders’ equity).
• Nonprofit organizations serve in a variety of sectors, such as religious, education, health, social services, commerce, amateur sports clubs, and the arts.
• The liabilities are subtracted from the assets to give the organization’s net assets (what the organization is worth) as of a certain date.
• That might mean using cash-basis accounting, tracking your gains or losses at the program level, or more.

Non profit balance sheet example

• An accountant can help you categorize these funds and provide you with accurate information as to how much your organization has available to use for future projects, fundraisers, charity events, etc.
• This statement is important because it helps stakeholders understand the organization’s ability to generate cash from its operations and how it manages its cash resources.
• Analyzing revenue and expenses in a nonprofit financial statement is essential for understanding the financial health of the organization.
• The next financial statement that you will see presented after the Statement of Financial Position is the Statement of Activities.
• The operating activities section of the Statement of Cash Flows provides valuable insights into the day-to-day financial operations of a nonprofit organization.

The Statement of Financial Position, also known as the balance sheet, provides an overview of an organization’s assets, liabilities, and net assets at a specific point in time. It shows the organization’s financial position and helps assess its liquidity and solvency. The Assets section of the Statement of Financial Position provides a snapshot of the nonprofit organization’s resources. Current assets are those that can be converted into cash within one year, such as cash, accounts receivable, and inventory. Non-current assets, on the other hand, are resources that are expected to provide benefits to the organization for more than one year, such as property, equipment, and investments.

What’s Included in a Statement of Financial Position?

It helps stakeholders assess how efficiently the organization is utilizing its resources to achieve its goals. The table can include columns for the type of liability, the amount owed, and the due date. This provides a clear overview of the organization’s financial obligations and helps stakeholders make informed decisions. The order of liabilities on your statement of financial position depends on their due date, with short-term obligations listed before long-term ones.

They are required by accounting services for nonprofit organizations law to comply with your request and can loose their nonprofit status if they fail to comply. Sometimes, what appears to be lessening resources results from your organization using what it has to make improvements and invest in your nonprofit’s future. First up on your journey to becoming a nonprofit balance sheet expert is exploring exactly what this financial statement entails. YPTC is not a CPA firm, and provides no attestation services with regard to financial reports. Without a customized software solution, many nonprofits download their accounting data to Excel to compile the information in a usable format. However, this can be extremely time-consuming for your nonprofit’s team and take energy away from focusing on your mission.