Financial Statements For Non-Profit Organizations

Financial Statements For Non-Profit Organizations

Like any other business, non-profit organizations have their own set of financial statements, presenting information relevant to managers, donors, bankers, and other concerned parties. The main divergence between a non-profit organization and a for-profit is that a non-profit has no owners, no investors. That is major - you will not see owner's equity or behalf or losses in financial statements.

Statement of Financial Position

This financial statement is the balance sheet of a non-profit organization. The main divergence between a quarterly balance sheet and a statement of financial position is the proximity of "net assets" instead of owner's equity in the statement of financial position. Since non-profits have no owners and no investors, the lack of owner's equity in this financial statement is understandable.

The formula for the statement of financial position is: Assets = Liabilities + Net Assets

Statement of Activities

The statement of activities is comparable to the wage statement. Revenues are presented along with expenses, usually summarized by functional area, such as programs, administration, and fundraising. Unlike a for-profit wage statement, the statement of activities does not show behalf or loss; instead it presents "changes in net assets".The statement of activities typically shows two lines: one line with starting net assets and a last line item with ending net assets. This presentation is unique to the non-profit sector.

The formula for the statement of activities is: Revenues - Expenses= convert in net assets + starting net assets = Ending net assets

*The ending net assets in this statement should agree with the same items in the Statement of Financial Position

Statement of Functional Expenses

This statement is unique to the non-profit organization with nothing like it in the for-profit business. This statement details the expenses and it is presented in a matrix format with charge descriptions as lines and three functional areas as columns. Many times schedule area is shown in more than one column, identifying each schedule separately. The prospect is that most money is spent in the schedule area, reflecting the organization mission and objectives.

The basic formula for the statement of functional expenses is: Total Expenses= schedule Expenses + menagerial Expenses + Fundraising Expenses

*The ending balance of the statement of functional expenses should agree with the expenses per Statement of Activities.

Statement of Cash Flows

This statement is the same as per for-profit businesses. It shows cash received and how it was used. As the case with for-profit, the statement can be ready using the direct formula or indirect. The idea is the same, but obviously containing non-profit exact information, such as grants receivable or cash from donations.

The formula for Statement of cash flows is: convert in Cash=Cash from Operations+ Cash from Investing+ Cash from Financing

*The statement of cash flows contains cash balance that should agree with the same cash balance in the financial position.

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