Nonprofit Balance Sheet Guide and Example Sage Advice US

The definition of a financial statement is a simple report that can be pulled together monthly (or as-needed) to give you a view of your financial health. This report will show them which of your activities brought cash into your operation during the period and which expenses ate up large chunks of money. If a grant-maker or a donor gives you money that is dedicated for specific programs, or that you need to use by a specific date, it’s still an asset.

• We also use different external services like Google Webfonts, Google Maps, and external Video providers.
• Fixed assets are your nonprofit’s furniture, equipment, and improvements made to a facility.
• They represent your organization’s ability to secure purpose-driven resources in concert with its vision.
• Investing activities are an important part of a nonprofit organization’s financial operations.
• It shows how cash is generated and used by the organization during a specific period of time.
• Nonprofit accounting involves recording and reporting financial information for organizations that do not operate to earn a profit.

FREE 8+ Non Profit Balance Sheet Templates in MS Word PDF

Further, providing a single lump sum balance for net assets without donor restrictions often does not tell the full story. For instance, the total net asset balance in all three examples below is $100,000. It is also worth noting that the valuation of assets is based on their historical cost or fair market value. Historical cost represents the original purchase price of the asset, while fair market value is the estimated price that the asset would fetch in the open market. The valuation method used depends on the accounting policies of the organization.

How to Prepare Financial Statements for Your Nonprofit

The change in net assets without donor restrictions indicates if an organization operated the most recent fiscal period at a financial https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ gain or loss. This line is a direct connection with and should be equal to the bottom line of an organization’s income statement (also called a Statement of Activities or profit/loss statement). The current ratio measures assets that will be cash within a year and liabilities that will have to be paid within a year and can provide an indication of an organization’s future cash flow. Current liabilities are obligations that a company must pay within one year, typically including accounts payable, short-term loans, and accrued expenses. These are listed on the balance sheet and can affect a company’s liquidity and financial health if not managed properly. Failure to meet these obligations can result in financial difficulties or even bankruptcy.

Key differences between for-profit and nonprofit balance sheets

Check out other articles we’ve provided on nonprofit accounting and accounting software. When viewing your balance sheet, your assets are your organization’s unrestricted income. This small business plan template provides sections for an executive summary, a marketing plan, funding requirements, and financial statements. Outline your mission, market analysis, financial projections, and operational strategy to create a comprehensive business plan. See these financial statement templates for Microsoft Word to complement your budget tracking and create a complete picture of your business’s financial performance.

Personal Monthly Budget Template

They provide a comprehensive view of the organization’s financial position, performance, and compliance with regulations. These statements play a crucial role in promoting transparency, accountability, and informed decision-making in the nonprofit sector. A nonprofit’s financial statements tell the story of how successfully it is advancing its mission and sustaining operations. More than just documents for compliance, thoughtfully crafted financial statements are essential for transparency, strategic planning, and funding efforts. By understanding the key components like position statements, activities statements, cash flow, and expenses/revenues, nonprofit leaders can accurately showcase their organization’s financial health. A nonprofit financial statement is a formal report that outlines the financial activities and position of a nonprofit organization.

The breakdown for Org A shows it has spent all its available cash on equipment or its facility and has an accumulated operating deficit of $20,000. Org B’s presentation shows it has planned for financial stability by maintaining operating cash and setting aside reserve funds in addition to investing in some equipment. Showing the net assets in this greater detail would help Org A’s board to understand why the organization has positive net assets but is still struggling to pay the bills on time.

⃣ Income statement

Overall, nonprofit financial statements play a critical role accounting services for nonprofit organizations in promoting transparency, accountability, compliance, and informed decision-making within nonprofit organizations. In this article, we have explored the sample financial statements for nonprofit organizations. We discussed the importance of financial transparency and accountability in the nonprofit sector.