Financial Statements For Non-Profit Organizations | Finance ...

Like any other business, non-profit organizations have their own set of financial statements, presenting information relevant to managers, donors, bankers, and other interested parties. The main difference 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 profit or losses in financial statements.

Statement of Financial Position

This financial statement is the balance sheet of a non-profit organization. The main difference between a regular balance sheet and a statement of financial position is the presence 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 income statement. Revenues are presented along with expenses, usually summarized by functional area, such as programs, administration, and fundraising. Unlike a for-profit income statement, the statement of activities does not show profit or loss; instead it presents ?changes in net assets?.The statement of activities typically shows two lines: one line with beginning 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= Change in net assets + beginning 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 expense descriptions as lines and three functional areas as columns. Many times program area is shown in more than one column, identifying each program separately. The expectation is that most money is spent in the program area, reflecting the organization mission and objectives.

The basic formula for the statement of functional expenses is: Total Expenses= Program Expenses + Administrative 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 prepared using the direct method or indirect. The idea is the same, but obviously containing non-profit specific information, such as grants receivable or cash from donations.

The formula for Statement of cash flows is: Change 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.

Source: http://www.zlbbehringassurance.com/financial-statements-for-non-profit-organizations.html

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