Nonprofit Statement of Financial Position: Guide + Template

Both our templates for an organizational chart for nonprofit organizations and board structure chart are in PowerPoint and show a hierarchy. The main difference is that one is designed from a nonprofit Board of Directors perspective and the other is an organizational chart structure for a nonprofit. This resource hub includes a variety of free nonprofit tools and templates designed to streamline your operations and maximize your impact. If your nonprofit needs assistance putting together a financial statement or simply The Key Benefits of Accounting Services for Nonprofit Organizations managing funds, indinero’s accounting services team is here to help. Our experts have extensive experience in the non-profit sector and are a more affordable option than a full-time employee or team. Nonprofits must file financial statements with the IRS to follow compliance laws, which is not the only reason they should include these activities.

Free Nonprofit Templates, Forms & Tools for Charities, NGOs & Nonprofits

• The above template is a standard Balance Sheet example that can be easily used by any Nonprofit organisation for declaring its assets and liabilities.
• It may be tempting to narrow in on one section of the balance sheet and make a quick assumption about your organization’s financial health.
• Restricted net assets are funds that are designated for specific purposes by donors or other external parties.
• It’s important to note that nonprofit financial statements are not just for internal use.
• More than just documents for compliance, thoughtfully crafted financial statements are essential for transparency, strategic planning, and funding efforts.

By monitoring and evaluating the performance of their investments, nonprofits can make informed decisions to optimize their financial resources. To present the financial information in a structured manner, nonprofit financial statements often include tables that summarize the data. These tables provide a clear and concise overview of the organization’s assets, liabilities, revenues, and expenses. The Nonprofit Balance Sheet or Statement of Financial Position reflects the financial stability of the organization. It allows stakeholders, including donors, grantors, board members, and management, to assess the organization’s financial health and sustainability.

Nonprofit Accounting Academy

To effectively implement accounting policies, nonprofit organizations should establish internal controls and procedures. This includes segregating duties, conducting regular audits, and maintaining proper documentation. By having strong internal controls, nonprofit organizations can minimize the risk of fraud and errors in their financial statements.

Free Sample Donation Request Letter for Nonprofits

In this article, we will explore the key components of nonprofit financial statements and understand their significance in assessing the financial performance and accountability of nonprofit organizations. The purpose of the notes in nonprofit financial statements is to provide additional information and explanations that are not included in the main financial statements. These notes help to clarify and expand upon the information presented in the statements, ensuring that users have a comprehensive understanding of the organization’s financial position and activities. The notes may include details about accounting policies, significant events or transactions, contingencies, and other relevant information. They serve as a valuable tool for stakeholders, such as donors, board members, and regulators, to assess the financial health and transparency of the nonprofit organization.

Net Assets

This statement shows that the organization had $10,000 in cash inflows and $15,000 in cash outflows, resulting in a negative net cash flow of $5,000. If cash inflows are greater than cash outflows, the nonprofit has a positive net cash flow. If cash outflows are greater than cash inflows, the nonprofit has a negative net cash flow. This statement shows that the organization had $50,000 in assets and $30,000 in liabilities, resulting in net assets of $20,000. The difference between assets and liabilities is the net assets (or net liabilities). This statement shows that the organization had $30,000 in donations and $20,000 in expenses, resulting in a net income of $10,000.

• Be wary of unexplained differences in the balance or even lacking transactions in the financial report.
• Find an auditing partner offering seasoned professionals who understand nonprofit cash flow management and reporting.
• Grants, on the other hand, are typically funds provided by foundations, government agencies, or other institutions for specific purposes or projects.
• Do not try to fit an entire balance sheet into one section when you can break it down into constituent components and facilitate transparency among board members and stakeholders.
• It also includes cash flows from activities such as grants, donations, and program-related revenue.
• In the Statement of Financial Position, the assets section is typically presented in order of liquidity, with cash and cash equivalents listed first.
• Nonprofits have a primary responsibility to the Internal Revenue Service (IRS) and their donors when filing and sharing financial statements.

The Statement of Financial Position (SOFP) is the correct nonprofit term for the balance sheet. Your size, your activities, and your funding sources will all determine which reports you need to run your business effectively. Tyler’s extensive background in accounting, tax, and financial consulting set the foundation for Velu’s outsourced accounting solutions for nonprofits and small businesses. As a fractional CFO, he goes beyond routine duties, guiding organizations with strategic insights for sound financial decisions. Velu’s services address the unique challenges faced by nonprofits and small businesses, fostering sustainable growth. Tyler places great emphasis on meticulous attention to detail in financial record-keeping, implementing efficient systems to ensure transparency and streamline operations.

• In the FAN example, the total column for 2018 total income shows the full $60,000 multi-year grant and reports a surplus of $40,325.
• Set guidelines for creating and distributing financial statements with our Nonprofit Financial Reporting Policy Template.
• Statements should strike a balance between spending necessary amounts to drive impact while maintaining reasonable overhead costs and minimizing waste.
• If you use the accrual method of accounting, you might record revenue before certain funds are actually received.
• Check out other articles we’ve provided on nonprofit accounting and accounting software.
• It provides information on the organization’s financial performance and the sources and uses of funds.

What role does the board play in a nonprofit’s financial statements?

The difference between assets and liabilities, essentially the equity of the nonprofit. Unlike for-profits, nonprofits don’t have owners, so instead of “equity,” they have “net assets.” For this reason, the nonprofit balance sheet is often referred to as the Statement of Financial Position. The change in net assets without donor restrictions indicates if an organization operated the most recent fiscal period at a financial gain or loss. This line is a direct connection with and should be equal to the bottom line of an organization’s income statement (also called a Statement of Activities or profit/loss statement). The balance sheet reports an organization’s assets (what is owned) and liabilities (what is owed). The net assets (also called equity, capital, retained earnings, or fund balance) represent the sum of all the annual surpluses or deficits that an organization has accumulated over its entire history.