HRD 606

—is incorporating your statement of financial position into your nonprofit’s annual report. Many organizations report some high-level financial data in the report itself, using charts and graphs to make it easier to understand. Then, they’ll attach their complete financial statements as appendices in case some readers want to dig deeper.

• The requirements vary based on the size of the organization, the amount of funding they receive, and specific state or grant-imposed criteria.
• Overall, the Statement of Cash Flows is a valuable tool for understanding the cash flow position of a nonprofit organization and assessing its financial health.
• The liabilities are subtracted from the assets to give the organization’s net assets (what the organization is worth) as of a certain date.
• Understanding net assets involves a clear grasp of the nonprofit balance sheet, also known as a statement of financial position.
• Use this free excel template to generate a balance sheet (statement of financial position) for your non profit.
• A nonprofit balance sheet provides a snapshot of the organization’s financial position at a specific point in time.

Nonprofit Ethics and Accountability: A Comprehensive Guide

Other items added to Capital Fund are the capitalized events or transactions like Legacies, Entrance fees, and Membership fees. Some funds may be created other than Capital Fund, like Sports Fund, Building Fund, etc., to meet the specific requirement or the requirements of donors/contributors. Contact us if you have any questions about our free simple non-profit budget template or any other budget template for non-profit organizations. While tax-exempt status might be determined by the IRS and federal law, nonprofit status is determined by state law.

• Additionally, the balance sheet helps demonstrate transparency and accountability to donors, grantors, and other stakeholders.
• The Assets section of the Statement of Financial Position provides a snapshot of the nonprofit organization’s resources.
• This template can be used for a Nonprofit for such a purpose and can be extremely handy.
• Contact us if you have any questions about our non-profit templates free resources or NGO templates free downloads and budget for nonprofit template outlined in the sections below.
• For a helpful visual, try Googling a nonprofit balance sheet example to help you understand how this process works.

How is a Nonprofit’s Balance Sheet Different?

Nonprofits must also be held to certain rules and regulations, and financial statements must be made available for the public to review and scrutinize. It’s a perfect slide to use to provide a visual https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ of your nonprofit’s Board of Directors. You can easily copy it into an annual report presentation and update it as your board changes. This free nonprofit and free NGO templates download is especially helpful for new organizations just starting out to get a jump start on their board structure. This free balance sheet template for non-profit organizations comes in an Excel format to make it easy for you to calculate income and expenses.

Current Liabilities: The Immediate Obligations

• Once you’ve got a bookkeeping system in place, you need to start creating financial statements.
• Your organization may have enough cash and other assets on hand to meet its short-term obligations.
• These are resources that the nonprofit owns or controls, which are expected to provide future economic benefits.
• 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.
• This planning shows how to appropriately schedule disbursements and build reserves in lean times.
• Contact us if you have any questions about this donation letter template or any of our free not-for-profit templates.

Liabilities are typically organized as current and non-current liabilities on the Statement of Financial Position. The closer the accounting services for nonprofit organizations liability’s due date is to the balance sheet day, the higher up on the liabilities section it will be. Temporarily restricted net assets often arise in the form of restricted donations or grants. These funds have no strings attached to them whatsoever, meaning they can easily be used towards general operations, new programming, or other opportunities that may pop up. While restricted funds are not available today for general expenses, they are vital to mission-critical initiatives.

The bottom line on nonprofit financial statements

In conclusion, analyzing a non-profit organization’s balance sheet is a crucial step in understanding its financial health and sustainability. It is important to consider the unique characteristics of non-profit organizations, such as their reliance on donations and grants, when interpreting the balance sheet. Additionally, regular monitoring and analysis of the balance sheet can help identify potential risks and opportunities for improvement. Overall, a thorough understanding of the balance sheet is essential for making informed decisions and ensuring the long-term success of a non-profit organization. The purpose of the notes in nonprofit financial statements is to provide additional information and explanations that are not included in the main financial statements.

Free Printable Nonprofit Financial Statement Templates

Our free sample nonprofit budget template is in Excel, allowing you to easily create charts and formulas based on your revenue and expenditures. Contact us if you have any questions about our free non-profit donation receipt template, nonprofit fundraising tools, or other resources. Contact us if you have any questions about our non-profit templates free resources or NGO templates free downloads and budget for nonprofit template outlined in the sections below. These non-profit organization templates cover everything from budgeting to donations to social work assessments.

It is important to learn how to read and understand your organization’s SOFP report. It can tell you how much is receivable, which is especially important when managing reimbursable grants and multi-year pledges. It differentiates net assets with donor restrictions from those without restrictions. It’s best to hire an in-staff or freelance accountant to create these reports, but if funds are unavailable, we hope this article helps you get started. Check out other articles we’ve provided on nonprofit accounting and accounting software.

• The net assets on your statement of financial position are where your organization must list these restrictions.
• Your nonprofit must also include your balance sheet with a snapshot of your organization’s finances at the beginning and end of the year when filing annual taxes with Form 990.
• Donors and stakeholders want to see the management putting their donations to good use and acting as a responsible steward of the organization’s finances.
• The Balance Sheet shows the value of assets, liabilities, and capital funds at the end of the accounting year of the organisation on a particular date.
• Non-profit organizations may invest in stocks, bonds, real estate, or other types of assets.

Why Do Nonprofits Need Financial Statements?

Small and midsize nonprofit organizations typically do not have net assets that are restricted permanently, such as endowments, and it is usually not advisable for them to do so. Having an endowment ties up cash that is not accessible to the organization for operations or program delivery. It is far more advisable for small and midsize nonprofits to build working capital cash and to fund an operating reserve before attempting to create an endowment. If a small or midsize nonprofit does have an endowment, the donor often requires that the income generated from the gift be used for operations or for a specific purpose. While a separate cash or investment account does not need to be established, the accounting records should include a calculation and entries to showing how this restriction has been met.