The organization can adjust its activities to succeed in its ventures. The nonprofit sector is no exception to this rule. It demonstrates how the funds are used to achieve the organization’s goals.
The image above demonstrates the American Red Cross’s operating revenue and gains in 2021 and in 2020. In this section, we will present a Nonprofit Statement of Activities example, along with a customizable template. Understanding these changes and trends can guide strategic decision-making, helping to ensure the organization’s long-term sustainability. It also enables them to reinvest in their mission, expand their services, and innovate, thereby increasing their impact. Changes in net assets is a unique and critical component of the Nonprofit Statement of Activities.
- The Statement of Activities is the Income Statement of a nonprofit organization.
- By “function” they mean the reason any expenses were incurred, such as management fees, or the costs of providing program services and fundraising activities.
- Once you have the change in net assets, you can compare revenue and expenses by significant program activity (or function) to see exactly where you are making or losing money.
- It also enables them to reinvest in their mission, expand their services, and innovate, thereby increasing their impact.
- This information can also help a nonprofit determine which revenue strategies are their most and least effective.
- The main thing is to stick with the same reporting period consistently, so the financial analysis stays accurate and easy to compare over time.
- The difference between total revenue and total expenses is known as the change in net assets.
International organizations
He stated that if the SEC “rewards the staff only for bringing enforcement actions, then we have discouraged the staff from determining not to recommend an enforcement action . In addition, while the Division’s traditional approach has been to assess performance based on the number of enforcement actions initiated and amount of monetary sanctions imposed in a fiscal year, Chairman Atkins appears poised to realign the incentive structure for Division staff. In addition, in April 2025, the SEC told staff that it was implementing a targeted reorganization of the Enforcement Division to restructure management and reporting across the Division. Moreover, consistent with President Trump’s February 2025 Executive Order temporarily pausing enforcement of the Foreign Corrupt Practices Act (FCPA) by the Department of Justice (DOJ), the SEC did not bring any new FCPA enforcement actions in FY 2025. Under Gensler, the Enforcement Division relied heavily on investigative sweeps—i.e., market-wide investigations into numerous market participants for similar misconduct—to bring enforcement actions. Although the overall number of enforcement actions brought in 2025 is not that much lower than in typical years, 93% of those cases were brought before former Chair Gensler stepped down on January 20.
Statement of activities definition
Plus, they show your nonprofit is staying compliant with financial regulations. Through a statement of activities, leadership can determine what programs are working, and where to invest future resources. It is prepared instead of the income statement issued by a for-profit business.
This concise opening links your activities to your mission and the purpose behind your fundraising efforts. When nonprofits and NGOs aim to secure funding, it’s both the big vision that wins over funders AND the tangible, actionable steps that make it clear that you can get there. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development. Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. Nonprofits must follow all donor requests, and these donations must be listed under restricted funds on a Statement of Activities. If you cannot find a nonprofit’s Statement of Activities, you can also ask the organization for a copy.
Statements of activities are useful in assessing the services provided by your organization, its ability to continue those services, and how managers have performed their stewardship responsibilities. 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. Reporting them helps financial leaders see where funding is going, and if your organization’s current programs will have long-term fiscal stability. Net assets with donor restrictions are usually never below zero, although special reporting may apply to an “underwater ” endowment balance (topic not covered here).
A multi-column format will be used to present the increases and decreases in net assets according to the intent of the donor with column headings for unrestricted, temporarily restricted, and permanently restricted. Return to the Internal Reports Introduction page for links to greater detail on how to read various reports as well as recommended formatting. The result of each year’s financial activity is shown as the “change in net assets,” that is, increases or decreases to the related net assets categories. Net results are classified as either with or without donor restrictions per FASB (the Financial Accounting Standards Board). For the past 52 years, Harold Averkamp (CPA, MBA) hasworked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online.
Simply, it reports your organization’s revenue and expenses during a specific period and the difference between them. That said, nonprofits can choose other reporting periods, like the calendar year, depending on their needs or any specific regulations they have to follow. An SOA helps nonprofits analyze their financial health by showing how revenues are generated and how funds are allocated. 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. The largest nonprofits in the US can accumulate annual contributions totaling billions of dollars, but the statement of activities breaks the figure down into just a few lines.
Key features of a nonprofit statement of activities
Discover its crucial role in your organization’s financial story. It reports changes in net assets across restricted and unrestricted categories instead of showing net income. Though it is possible to compress these rows down to just a few line items, it is customary to be more expansive in detailing revenues and expenses. We’ll help you determine if outsourcing your accounting and bookkeeping is the right decision for your organization. And how those expenses relate to the work of carrying out your mission.
However, the benefits of being transparent in your financial activities go much deeper. A surplus points to growth potential and the capacity to expand or improve programs, while a deficit suggests the need to adjust spending, boost fundraising, or explore new revenue streams. The difference between total revenue and total expenses is known as the change in net assets. This functional turbotax® 2019 tax software for filing past years taxes, prior year tax preparation categorization highlights how resources support the mission, and lets donors gauge whether spending is within reasonable limits.
For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. And, as always, for additional tips, Candid always has great free fundraising resources. By following this structured approach, your organization can effectively communicate how you plan to create change. You, and your fundraising team, can do this!
Understanding these elements thoroughly is essential for comprehending a nonprofit organization’s financial health and operational efficiency. Conversely, a program with high costs but low revenue or impact might need to be reassessed or refined to better align with the organization’s mission and financial capabilities. Having a high level of financial transparency plays a key role in the sustainability and growth of any nonprofit organization. This means that the Statement of Activities reports on all the revenue earned, expenses incurred, and changes in net assets within this annual period. A Statement of Activities, often compared to the Income Statement of a for-profit business, is a critical financial document for any nonprofit organization.
Nonprofits have a unique way of operating, and nowhere is this more apparent than when you do your financial reporting. Their expenses prioritize program services as part of their mission, followed by supporting services such as fundraising and indirect costs. The image below is the SOA of a nonprofit organization in Washington, DC, called Freedom House (2015). The SOA contrasts an organization’s net assets with its income and expenses for a fiscal year. An income statement is used to show a company’s profitability.
- Understanding these changes and trends can guide strategic decision-making, helping to ensure the organization’s long-term sustainability.
- The Financial Accounting Standards Board also requires nonprofits to report changes in net assets based on the restriction categories of permanently, temporarily, or unrestricted.
- If your nonprofit provides and charges people fees for their services, you can also report this revenue on your Statement of Activities.
- Consequently, the increase in net assets of $22,500 is derived after deducting both revenues and expenses.
- Charity runs on finances, and finances run on accounting.
- We also expect some changes to the enforcement process under Chairman Atkins.
Nonprofit Statement of Activities: A Complete Guide (+Template)
Join thousands of nonprofits who have secured over $200 million in funding through Instrumentl. It is similar to a profit and loss statement in for-profit businesses but tailored to nonprofit operations. The Nonprofit Statement of Activities is an essential financial document that offers a comprehensive view of an organization’s financial status.
The SEC closed numerous matters in 2025, the common thread being greater alignment of the agency’s enforcement agenda with the broader policy priorities of the Trump Administration. As anticipated in last year’s Review, 2025 saw the SEC shift its focus toward “bread-and-butter” enforcement, resulting in the closure or dismissal of several high-profile lawsuits and investigations in novel areas, most notably in the cryptocurrency space. We also expect some changes to the enforcement process under Chairman Atkins. Chairman Atkins has signaled that he will not maintain this focus on record-keeping violations, commenting that it has “consumed excessive Commission resources not commensurate with any measure of investor harm.” The SEC initiated nine actions in January 2025 as part of the Gensler SEC’s off-channel communications sweeps targeting record-keeping violations.
How are SOAs Different from an Income Statement?
The restricted section in your report will educate all who view it that these funds cannot be used to pay rent or cover maintenance fees. For instance, if you have a donor that wants to donate to school technology, your report must show that. Donations your nonprofit receives during events, campaigns, and other times throughout the year. Organizations can also use this report to educate board members and staff leadership on financial needs and opportunities.
If that’s the case, your stakeholders (donors, grantors and regulators) will appreciate being able to see how each of those sources contributes to the mission. Nonprofit expenses also tend to vary according to each program’s purpose. Find out what it takes for nonprofit finance teams to not only survive but thrive with our Ebook survival guide. Here, we explain its examples, template, and comparisons with income statement. The expenses, revenues, and changes in net assets help the management achieve important objectives. Consequently, the increase in net assets of $22,500 is derived after deducting both revenues and expenses.
A common misconception about nonprofit organizations is that they should operate on a break-even budget. Additionally, a nonprofit Statement of Activities also acts as a strategic internal tool for nonprofit leaders, enabling them to evaluate the efficacy and viability of the organization’s programs. In general, the Statement of Activities is required to paint a holistic picture of a nonprofit’s financial health and ensure fiscal transparency in its operations.
There’s no escaping the task of keeping your financial documentation up to date and trustworthy, but it doesn’t have to be a chore. You may prefer to stick strictly to monetary transactions which can be registered instantly. The organization carefully logs the types of foods donated and every year conducts a survey of prices so it can calculate the full value. Nonprofits are required to file Form 990, with the IRS by the 15th day of the 5th month after the end of their fiscal year. And internally, by analyzing revenue sources and spending patterns you can identify which programs are thriving, which areas need more funding, and where you have inefficiencies. Separating each stream by source also clarifies whether different donor conditions are applicable (e.g. unrestricted, temporarily restricted, or permanently restricted).
This type of report gives a quick look at the financial position of an organization. In the nonprofit sector, there is a similar report known as a “Statement of Financial Position,” “Statement of Activities,” https://tax-tips.org/turbotax-2019-tax-software-for-filing-past-years/ or a “Statement of Cash Flows.” Your nonprofit Income Statement shows the year-over-year income and spending trends.