Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development. Any other donations that do not come with a designation can be termed unrestricted funds. Since many of your expenses will cover salary, insurance, rent, utilities, events, technology, etc., you may find that your restricted funds are https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ higher than unrestricted ones. All revenue sections from your organization must also be split between unrestricted and restricted funds.
Statement of Activities: Reading a Nonprofit Income Statement
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Understand the revenue and expenses
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. Analyzing the relationship between revenue and expenses within each category offers valuable insights. For instance, a high fundraising expense ratio might indicate inefficiencies in fundraising strategies. Conversely, a significant portion of total expenses dedicated to program services demonstrates a strong commitment to fulfilling the organization’s mission.
Want to see a live breakdown of real-life nonprofit financial statements
- Revenues represent the total income a nonprofit organization receives from various sources, such as donations, grants, program fees, and investment returns, during a specific period.
- Budgeting for nonprofits can become complex when it involves several overlapping categories, such as grants, programs, function, and nature.
- This Non-Profit Organization Statement of Activities Template should help you on inputting your financial transactions into correct categories.
- The Statement of Activities tracks your nonprofit’s income and expenses, showing financial performance over time.
- The statement of activities is a key financial report used by nonprofit organizations to provide an overview of their financial performance over a specific period.
If you use accounting software, you’ll need to input all of the information manually. This accounting services for nonprofit organizations can be time-consuming, but it’s not as expensive as hiring an accountant. There are two levels to the statement of activities; the summary level and the program level.
Non-Profit Organization Statement of Activities Template
By homing in on the revenue section, the nonprofit can determine just how stable and secure revenue streams are. If a nonprofit realizes that it’s getting the majority of its revenue from just one source, it might be a good idea to start diversifying revenue. This information can also help a nonprofit determine which revenue strategies are their most and least effective. This amount reflects whether revenue exceeded expenses (surplus) or fell short (deficit) for the year. Generally accepted accounting principles dictate that these two categories must be clearly delineated and recorded differently.
