Statement of Activities: Reading a Nonprofit Income Statement


statement of financial activities

These two transactions alone increased net assets by $764,032, but did not produce any positive cash flow. Investments increase the asset called investments, but do not immediately result in a cash flow. So we can see how net assets can increase substantially without any change statement of financial activities in cash flow. These reconciliations decreased net assets by $198,775 and $271,087 respectively, so here they are added back to total net assets. That’s why profitability is one of many criteria we need to apply when thinking about the finances of a public organization.

These contributions can be in the form of cash, securities, property, or in-kind donations, and they play a significant role in supporting your nonprofit’s activities and programs. However, as you know a nonprofit is not like any other business, so it is no surprise that nonprofit financial reports are different. For nonprofit organizations, the financial report that meets the requirements for an income statement is called the Statement of Activities. A government’s Statement of Activities presents much of the same information we see on the income statement for a for-profit or non-profit.

What is a Statement of Activities?

The scholarship foundation’s details fit well with what donors expect to hear from the organization. Finally, financing revenue comes from the earnings and interest earned on your financial activities and savings. Financial statements also give donors a better understanding of how the organization is doing. The term includes the flow of cash into and out of the company, i.e., cash inflows and outflows.

statement of financial activities

It is common knowledge that businesses must pay taxes and file a federal income tax return each year, but for tax-exempt organizations, compliance requirements are different. While there is no federal income tax return required for not-for-profit companies, they must still complete an annual return, called Form 990. The Statement of Activities shows users how much money the organization earned and spent over a specified time period. The report can be generated to show an entire year of the activity or one month at a time. Your nonprofit Income Statement shows the year-over-year income and spending trends.