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Feb 24 2019

How to Read Your Nonprofit Statement of Activities Report

The nonprofit Statement of Activities is one of the main financial statements of a nonprofit organization.

 

Key to Fulfilling Mission

Being a nonprofit does not mean, I don’t really care abut my finances. Understanding your finances and resources is extremely important to a nonprofit, because it provides insight as to whether or not you have the required resources to fulfill your mission. Today we are going to examine and learn how to understand your Statement of Activities, or Statement of Income and Expenses.

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Segregates Financial Activity

The nonprofit Statement of Activities is one of the main financial statements of a nonprofit organization. Unlike a for profit income and expense report, a statement of activities must segregate financial activity by revenue classes to identify funds received without donor restrictions and funds with donor restrictions.

Shows Sources of Funds

The revenue section contains a breakdown of the major sources of revenue, such as contributions, program fees, membership dues, grants, investment income, and amounts released from donor restrictions.

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Expenses Section Identifies Functional Areas

Expenses are reported in categories that identify specific functional areas, such as mission based programs, and support services including management and general and fundraising.

Measures Sustainability

It is important for a nonprofit to easily generate this statement to measure if each of their mission based programs has the resources necessary to operate efficiently and can be sustainable for the organization. Without the proper matching of revenue and expenses, nonprofit management cannot generate the reports needed for funding sources, IRS reporting, and more importantly they will not be able to make informed decisions on their organization’s financial outlook.


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Bottom Line

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.

Want to read more? Check out these insightful articles:

  • Nonprofit Accounting: Guide to Classifying Functional Expenses
  • 3 Key Advantages of Fund Accounting Software for Nonprofits
  • Nonprofit Accounting Course: Essential Skills Training
  • Nonprofit Financial Statements: How To Generate Compliant Reports

Did you find this article useful? We welcome your thoughts and comments.

Written by Joseph Scarano · Categorized: Accounting for Nonprofits · Tagged: Accounting Software for Nonprofits, Charitable Contributions, Charitable Gifts, Functional Accounting, Nonprofit Accounting, Nonprofit Accounting Software, Nonprofit Financial Statements, Nonprofit Fund Accounting Software

About the Author

Joseph Scarano is the CEO of Araize, Inc., developers of cloud-based FastFund Online Nonprofit accounting, fundraising and payroll software solutions to help your nonprofit become more transparent, accountable and sustainable.

Reader Interactions

Comments

  1. Lynne says

    June 25, 2020 at 6:27 pm

    Hello
    My nonprofit have only been in existence for a short period and have operated to its full potential even less. We are looking for grant writers that can help. Can you direct me to any?

    Reply
    • Joseph Scarano says

      June 29, 2020 at 9:44 am

      Lynne,

      Sorry I do not know of any grant writers. No one would know the importance of your organization’s mission than you, so I would recommend you write the grant proposal. Also, try entering the following in Google Search to find ways to secure grants for your nonprofit: “Acquiring a Grant for a Nonprofit.”

      There will be a list of possible grant sources that you can apply for a grant. Good luck.

      Reply

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