It may also have 50 general ledger accounts for each of its major programs, plus many accounts under its fundraising and management and general expense categories. The summary level includes all of the nonprofit’s income and expenses. Internal service funds are not reported on the statement of activities unless they provide goods or services to entities outside the primary government. MIP Fund Accounting® allows you to easily generate a statement of expense with its 130-plus pre-built reports and custom report-builder.

Under the accrual method of accounting, expenses are to be reported in the accounting period in which they best match the related revenues. If that is not clear, then the expenses should be reported in the period in which they are used up. If there is uncertainty as to when an expense is matched or is used up, the amount spent should be reported as an expense in the current period. The items that cause the changes in Net Assets are reported on the nonprofit’s statement of activities (to be discussed later). The program level goes into more detail and breaks down the income and expenses by program.

If a government chooses a separate line, it should clearly indicate that this line excludes the direct depreciation reported in the specific functions. Sharing these 3 sections with donors provides transparency and helps them understand where their donation goes. Websites like GuideStar also look at these reports when choosing which nonprofit to award their platinum and gold seals of approval. You can also show these expense amounts and percentages on your website. If you’re a voluntary health or welfare organization you also must present your expenses in a matrix, which includes both the natural and functional expenses by program, according to FASB Statement 117. Your nonprofit works to accomplish its mission, and when it comes to communicating that to donors and external stakeholders, no document is as helpful as a statement of activities.

Capital Assets

Get our FREE GUIDE to nonprofit financial reports, featuring illustrations, annotations, and insights to help you better understand your organization’s finances. The statement of activities can also help you assess your organization’s ability to service debt. By understanding where your money is coming from and going, you can make informed decisions about future expenditures. This statement is important for nonprofits because it helps to determine where changes can be made to fund necessary projects. The statement of activities is also important for nonprofits because it can help companies plan their resources and track their progress. Every nonprofit’s statement of activities will look a little bit different.

Restricted Revenue shows funds with donor-placed restrictions on how or when you can spend the money. You can include all restricted funds together or segment them by donation type. Overall, the statement of activities is an essential tool for nonprofit leaders.

The P&L covers all the organization’s programmatic, fundraising, and administrative expenses incurred during the period. The statement also reports all the revenue generated during the period, regardless of the source. Statement of Activities is part of your nonprofit’s accounting requirements and is often included in its annual report or audited financial report. If you’re starting a new nonprofit, a statement of activities is one of the 4 financial reports you must file.

Supplies, Services and Other Purchases

These changes would free up additional funds that could be used to support additional programs or services offered by the Foundation. Nonprofit organizations rely heavily on financial reports to make informed decisions about their operations. The nonprofit statement of activities is one of the core accounting documents that your organization creates. It allows you to see how the organization uses its funding to advance the mission and allocate resources. In addition, it shows the sustainability of the organization’s finances. The net assets featured on your nonprofit statement of activities are simply your expenses subtracted from your revenue.

At the bottom of the report, there’s a section dedicated to the net assets of the organization. The net effect of all revenues and expenses is a change in net assets, rather than the profit or loss figure found in the income statement of a for-profit entity. For example, a nonprofit is likely to have a separate general ledger account for each of its bank accounts.

Expenses in the Statement of Activities include all money flowing out of your organization. The first step in reading a Statement of Activities is to understand its purpose. “Commissioner of Police Afolabi Babatola worked out the strategy, which yielded another success as 14 suspects were apprehended,” the statement said.

Why Your Nonprofit Needs to Report a Statement of Activities

Kenya, however, is the first country to go further and suspend the company’s operations completely while local agencies investigate. 2 “Banks” refers collectively to national banks, federal savings associations, and federal branches and agencies of foreign banking organizations. More information on the U.S. government’s efforts to support cybersecurity and connectivity in Ukraine is available here. Kristin focuses on not-for-profit organizations and trade associations, as well as real estate and attest engagements under the Renewable Fuel Standard. Page 3 and 4 are checklists noting which additional schedules may be required.

• The number of accounts depends on the number of programs that the nonprofit has, the types of revenues it earns, and the level of detail required for planning and control of the organization.
• Net results are classified as either with or without donor restrictions per FASB (the Financial Accounting Standards Board).
• After that time elapses, they can be released from restriction and used as the nonprofit sees fit.
• Note, that there is special guidance on allocating costs related to an activity that combines fundraising with elements of another function.
• These gifts must be posted separately from cash and in-kind contributions.

The Statement of Activities is the Income Statement of a nonprofit organization. FastFund Accounting automatically generates your Statement of Activities with the proper segregation of revenue classes and expense functional categories. You don’t have to jump through hoops and spend countless hours manipulating your financial data from an accounting system that doesn’t automatically create this essential financial statement for your nonprofit. Improved financial management can help your nonprofit organization better allocate its resources and improve its overall performance.

Table of Contents

It details operating revenues, operating expenses, non-operating revenues and expenses, and changes in net assets. This report includes pledges, depreciation, and accruals (non-cash, long-term liabilities), and subsidiary income and expenses. In contrast, the Operating Budget includes cash payments on pledges, debt repayments, and omits accruals. A statement of activities fantasia quantifies the revenues and expenses of a nonprofit entity for a reporting period. This is the nonprofit version of the income statement that is used to report the financial results of a for-profit business. Nonprofit recordkeeping can get a bit challenging, so it is worth noting that accounting software exists to help nonprofits record transactions efficiently.

Show your organization is on track to accomplish its mission, and that it handles donor funds responsibly. Major non-operating revenues include the realized gains or losses and unrealized valuation adjustments (investment return) less the amounts used to support operating expenses, and resources that support facilities. Major non-operating expenses include pension and post-retirement benefits and valuation adjustments. Since functional expenses are a big theme for many investors, particularly the percentage of money you’re spending on programs, most nonprofit Statement of Activities are organized according to functional expenses. Restricted Revenue includes any donations which have donor-placed restrictions on how or when the money can be spent, while Unrestricted Revenue includes any money which can be used for any purpose.

You should review your statement of activities monthly to identify trends and changes. If your organization has deficits in specific periods, those deficits should be offset by surpluses in other periods. If you’re spending more than you’re bringing in for several periods in a row, you need to figure out what’s going on and fix it before it gets too bad.

What will your CPA look for on your Statement of Activities?

A statement of activities is a comprehensive report that provides valuable information about an organization’s finances. It typically includes data on revenues, expenses, and changes in net assets. Columns are included to report data for each class of net assets – without donor restrictions, with donor restrictions, and total. This report is important for nonprofit organizations because it helps them assess their performance and identify areas where they need to improve. The Statement of Functional Expenses is a unique reporting requirement of nonprofits. If the Statement of Activities does not show expenses by both nature and function as discussed in the previous paragraph, a separate statement showing this breakout is required.

It is prepared instead of the income statement issued by a for-profit business. This report identifies funds received without donor restrictions and funds with donor restrictions. Additionally, this report will identify how much money the organization spent on operating expenses and how much money was raised from donations.

Cornell Financial Guide

You’ll need to record information about your organization’s expenses and revenue in your Form 990. Therefore, between your statement of activities and statement of functional expense, you’ll be all set to file your Form 990 each and every year. Since a nonprofit’s primary purpose is to provide programs that meet certain societal needs, it issues a statement of activities (instead of the income statement that is issued by a for-profit business). A Statement of Activities is one of the four required financial statements a nonprofit must file. Nonprofit accounting can feel complicated for nonprofits without a solid financial background, but there are ways to make filing reports easier.

• A nonprofit statement of activities example will have a heading, body, and bottom line.
• Instead the amounts show as a release of restriction with the qualifying expenses showing as a change in net assets without donor restrictions.
• The timing may be dependent on the activity of the organization, but typically monthly reviews are recommended.
• Operating revenues include anticipated earnings related to Cornell’s mission of «learning, discovery, and engagement» along with services that support students and campus operations.
• The expense section reports all cash that flows out of your organization, including pending expenses—those you know you’ve incurred but haven’t spent the money yet, such as payroll for hours worked the previous month.
• Many nonprofits are required to submit their statement of activities to the IRS, and some nonprofits choose to make their statement of activities available to the public on their website.

The allocation is a determination made by management and is an estimate. For example, salaries and benefits expense may be based on estimated time and effort spent in each category, while rent expense may be based on square footage used. There is no one required way to allocate costs, but typically time and effort estimates are the most readily available and can be used to estimate allocations for multiple expenses. There may also be expenses that are direct program, general and administrative, or fundraising expenses and those should be reported as such. It must also show the change in net assets for both net assets without donor restrictions and net assets with donor restrictions along with a total change in net assets.