Lesson 6 – Nonprofit Financial Statements

Nonprofit financial statements must properly categorize revenue and expenses to demonstrate accountability and compliance. The benefit of preparing and understanding nonprofit financial statements is to help your organization stay on budget, measure outcomes, plan for the futures, address and correct inefficiencies and maintain sustainability. Nonprofit leadership needs to take an active role in their organization’s financial health, to benefit all areas of the organization, including programs, administration and fundraising.

Four types of nonprofit financial statements:

• Statement of Activities – Profit and Loss/Income Statement
• Statement of Changes in Net Assets – Profit or loss by revenue designation and by functional area combined with each net asset class’s changes in net assets.
• Statement of Financial Position – Balance Sheet
• Statement of Cash Flow