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Statement of Financial Position: A Look at the “Balance Sheet” for Nonprofits
- A Statement of Financial Position, commonly known as a balance sheet in the for-profit industry, offers a consolidated view of assets and liabilities for nonprofits.
- It includes categories like assets, liabilities, and net assets.
- Assets in a Statement of Financial Position encompass current assets (like cash, investments, and inventory) and noncurrent assets (like property and long-term investments).
- Liabilities in this statement cover current liabilities (e.g., accounts payable, short-term debt) and noncurrent liabilities (e.g., long-term debt, pension liabilities).
- Net assets are calculated as assets minus liabilities, reflecting the financial standing of the organization.
- Nonprofits differentiate between restricted and unrestricted funds in their net assets to ensure correct allocation and usage for specific causes.
- The terms 'equity' for-profit companies and 'net assets' for nonprofits reflect the ownership distinction in financial balances.
- Nonprofit Statements of Financial Position aid in transparency, financial health assessment, compliance, planning, decision-making, and fund management.
- These statements are crucial tools for board oversight, stakeholder communication, budget allocation, and strategic resource planning.
- Blackbaud Financial Edge NXT® provides relevant templates for nonprofit financial reporting, simplifying statement creation and management.
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