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4 Nonprofit Financial Statements and How to Create Them
- Effective financial management equips you to make the most of your nonprofit’s limited resources.
- Four core reports, known as financial statements, that nonprofits should create to review financial data and activities.
- The first statement is the Statement of Activities, which details a nonprofit’s revenue sources and expenses.
- The second statement is the Statement of Financial Position, which highlights the change in net assets in detail.
- The third statement, which is the Statement of Cash Flow, highlights inflow and outflow of cash and how much cash is available to cover expenses.
- The fourth statement is the Statement of Functional Expenses, where you will be able to get a detailed report on all of the expenditures of the nonprofit in accordance with the mission.
- When the time comes to compile your financial data into organized reports, there are a few steps you must follow.
- The first step is to gather financial data which includes income, expenses, assets, liabilities, and details on restrictions.
- The second step is to compile data in a financial statement template.
- The third step is to consult a professional accountant.
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