An organization without owners and with the main purpose of providing services needed https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ by society. Internal Revenue Service, a nonprofit organization may be granted tax exempt status. Since the Form 990 filed by the nonprofit becomes public information, you can learn much about a nonprofit by reading the information on Form 990.

Understanding Nonprofit Statements of Activities

Effective use of this statement can thus not only support operational and strategic management but also enhance fundraising efforts by reinforcing the credibility of the organization. Out of the four most common financial statements in a nonprofit, the Statement of Activities, also known as the Profit & Loss (P&L), is the broadest. The P&L covers all the organization’s programmatic, fundraising, and administrative expenses incurred during the period.

• Reporting gains and losses within the statement of activities offers a comprehensive perspective on financial performance beyond routine operations.
• Understanding these elements thoroughly is essential for comprehending a nonprofit organization’s financial health and operational efficiency.
• All of these reports inform your organization’s annual tax return (IRS Form 990) as well as various other financial activities.
• The revenues are broken down further into temporarily restricted, permanently restricted and unrestricted.
• If you’re looking to understand how your nonprofit is spending its money, the statement of activities is a valuable resource.

Free Download: Nonprofit Statement of Activities Template

We will not discuss the accounting which is similar to that used by for-profit businesses. If you are not familiar with accounting for businesses or you need a refresher, you will find explanations, practice quizzes, Q&A, and more by visiting our course outline. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. This article is for informational purposes only and should not be considered financial advice.

Need your Statement of Activities on time, every month?

• A statement of activities shows your organization’s revenue and expenses over a reporting period and relays that your organization is a good steward of donations and working to accomplish its mission.
• It is also the term used by not-for-profit organizations instead of owner’s equity or stockholders’ equity.
• However, if you’re facing financial challenges, such as overspending, you may need to take a look at your expenses and see where you can cut back or look for other opportunities to get funding.
• The way these funds are reported in the Statement of Activities helps provide clear insight into the financial constraints and capabilities of the organization.
• Let’s navigate these challenges together, with precision, foresight, and the shared goal of creating lasting social good.

Management and general expenses accounting services for nonprofit organizations support the overall administration and infrastructure of the organization, including salaries of administrative staff, office rent, and technology costs. Fundraising expenses encompass activities dedicated to securing financial resources, such as direct mail campaigns, grant writing, and fundraising events. Distinguishing these categories allows for a clear assessment of resource allocation between mission-related activities and supporting functions. Revenue recognition within the statement of activities is critical for demonstrating financial health and sustainability.

• Public Foundation, NGO, church, masjid/mosque are usually required to present this type of income statement as a format document.
• Without that, the SOA can misrepresent the financial health of the organization and lead to future funding issues.
• For example, a nonprofit is likely to have a separate general ledger account for each of its bank accounts.
• This Nonprofit Organization Statement of Activities Template is a meticulously designed financial reporting tool tailored for nonprofit organizations.
• They help board members better understand your nonprofit’s capacity for growth, too.

It means the organization is doing well and is able to continue its operations. We consider that there is a time restriction on the funds allowing only 1/3 of the donation to become unrestricted in a given year. All of the vital accounting statements that you pull together to draw conclusions from are pulled from your nonprofit chart of accounts.

Board Designated Funds

Nonprofits do need to file a form related to taxes that is known as a Form 990. This type of document allows both the Internal Revenue Service and the public to look at the nonprofit’s finances. A gain is measured by the proceeds from the sale minus the amount shown on the company’s books. Since the gain is outside of the main activity of a business, it is reported as a nonoperating or other revenue on the company’s income statement. It is also the term used by not-for-profit organizations instead of owner’s equity or stockholders’ equity.