The goal of a statement of activities is to determine whether an organization can fund its activities and if not, to pinpoint where changes can be made to increase revenue or decrease costs. The process of creating a statement of activities is not difficult and should not take long to complete. 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.

• This is a quick reference to see how much money has been spent or how much money is left over.
• If indirect expenses are allocated, direct and indirect expenses should be presented in separate columns.
• Finally, the amount of cash available to the company should ease investors’ minds regarding the notes payable, as cash is plentiful to cover that future loan expense.
• Your nonprofit statement of activities is split into several different sections.
• Nonprofit accounting differs from business accounting, because nonprofits don’t exist to make profits.

A statement of activities is a comprehensive report that provides valuable information about an organization’s finances. 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.

Deferred Outflows/Inflows of Resources

A Statement of Activities shows whether an organization made a profit or a loss during a period of time. It is a financial snapshot that can be used to track the organization’s financial progress. In that case the line should be clearly labeled to indicate that not all interest is reported here. While the goal of a nonprofit isn’t to turn a profit, if you don’t bring in more than you spend, you won’t be able to survive. And a little “profit” helps build your operating reserves to help you survive a slow-fundraising quarter or unexpected expenses.

However, if $15,000 of your revenue is restricted, you’re actually $5,000 in the red and should cut expenses to maintain a sustainable organization. Nonprofits receive revenue from a number of different sources, all of which are essential to helping the organization pursue its mission. The majority of this revenue will be recorded as gross in your statement of activities. This template provides a clear and organized way to present financial information, including revenues, expenses, and net change in financial position, by class, location, and project.

State Appropriations for Capital Acquisitions

The statement of activities is prepared using the trial balance the NFP compiled after it has processed all year-end adjustments and verified the accuracy of account balances. Just like the income statement, the statement of activities presents the results of the NFP’s operations over a period of time, usually a financial year. The results of each successive fiscal year’s financial activities accumulate on the SOFP, changing the net asset balances. Repeated annual deficits in the SOA will result in an accumulated deficit on the SOFP. Net assets with donor restrictions are usually never below zero, although special reporting may apply to an “underwater ” endowment balance (topic not covered here). Once the total expenses are subtracted from the total collected revenue, the result is a change in Net Assets.

Whether non-profit or for-profit, the impact of inaccurate or late financial information can have a devastating effect on the organization’s long-term financial health. At GrowthForce, we specialize in helping for-profit and non-profit organizations statement of activities keep their finger on the financial pulse, so they can focus on what really matters – achieving their greatest potential. Unlock a template for a one-time fee, which includes unlimited access and full support for template implementation.

What is the statement of activities?

The nonprofit statement of activities separates revenue with and without restrictions so that organizations can see the flexibility in their funding in addition to the sheer amount of it. Meanwhile, unrestricted revenue can be allocated toward projects, operations, and other expenses as chosen by the nonprofit itself. A cash flow statement is a valuable measure of strength, profitability, and the long-term future outlook of a company.

The cash flow statement (CFS), is a financial statement that summarizes the movement of cash and cash equivalents (CCE) that come in and go out of a company. The CFS measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses. As one of the three main financial statements, the CFS complements the balance sheet and the income statement. In this article, we’ll show you how the CFS is structured and how you can use it when analyzing a company.

Types of Expenses

This is a quick reference to see how much money has been spent or how much money is left over. The change in net assets is essentially the net profit on income statements as used by corporations. Contributions for capital projects, endowments, and similar funds are reported as non-operating revenues.

• Also known as the statement of cash flows, the CFS helps its creditors determine how much cash is available (referred to as liquidity) for the company to fund its operating expenses and pay down its debts.
• 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.
• While for-profits focus on making as much income as possible to make more money for themselves, nonprofit organizations focus instead on how they can raise additional revenue to further their missions.
• The template is created by LiveFlow – LiveFlow is a software platform that helps businesses to automate financial workflows and manage their finances with ease.
• State appropriations are funds distributed through the State University of New York (SUNY).
• By analyzing your nonprofit’s statement of activities, your organization can determine if the expenditures currently allocated for each of your programs are sustainable for the long run.
• Take our 2-minute survey to find out if outsourced accounting and bookkeeping is a good fit for your organization.

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. A nonprofit statement of activities example will have a heading, body, and bottom line. 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. 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.

Supplies, Services and Other Purchases

Revenue will be reported in the without donor restrictions column unless the donor has imposed specific conditions on the use of the contribution. By analyzing your nonprofit’s statement of activities, your organization can determine if the expenditures currently allocated for each of your programs are sustainable for the long run. You can use the information in this statement to better understand if now is the right time to cut expenses, provide membership discounts, or secure additional funding through grants or sponsorships. With the indirect method, cash flow is calculated by adjusting net income by adding or subtracting differences resulting from non-cash transactions. Non-cash items show up in the changes to a company’s assets and liabilities on the balance sheet from one period to the next. Therefore, the accountant will identify any increases and decreases to asset and liability accounts that need to be added back to or removed from the net income figure, in order to identify an accurate cash inflow or outflow.

The report can be used to improve fund-raising efforts by highlighting the different ways in which donations can be used to support your mission. By understanding the various sources of revenue and expenses, you can target potential donors and make more informed decisions about how to allocate resources. 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. The audience of an organization’s financial reporting includes funders, donors, boards of governors and regulators. These stakeholders are mainly interested in the relationship between a nonprofit organization’s program expenses and its supporting expenses.

The net assets featured on your nonprofit statement of activities are simply your expenses subtracted from your revenue. This calculation shows the equity of your nonprofit organization and whether you have the revenue to cover expenses, creating a sustainable organization. The cherry on top is that this report can help your organization file your annual Form 990 report. 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.

Nonoperating revenues with the exception for taxes and investment income should be also reported as program revenues. Unlike the income statement, the statement of activities normally has three columns for each reporting period, as you will see below. This is because it must report the changes in net assets with donor restrictions and net assets without donor restrictions separately. NFPs can alternatively prepare separate statements of activities for each class of net assets.

Contributions for capital acquisitions, trusts, and endowment, represents gifts designated for non-operating purposes such as capital projects, trusts, and endowments. This amount represents the planned, gradual reduction in the recorded value of assets over their useful lives by charging them to expense. The State of New York pays the benefits and accrued expenses for all contract college employees. This amount includes salaries, wages, other compensation, and benefits for all non-contract college employees.

We welcome your feedback on this guide to Cornell University’s financial statements. To fulfill Cornell’s primary missions, operating expenses consist primarily of salary and benefits and maintenance costs for facilities and services. This amount represents the transfers of funds from temporarily restricted net assets to unrestricted net assets resulting from the satisfaction of donor-imposed stipulations concerning timing or purpose. Operating revenues include anticipated earnings related to Cornell’s mission of «learning, discovery, and engagement» along with services that support students and campus operations.