Financial statements of nonprofits

financial statements for nonprofits

It can be tough to find the right balance between information and overload. We’ve gathered seven of the best nonprofit annual reports that strike this balance. We hope they give you inspiration for your own nonprofit’s annual report. If you’re feeling ready to create, get started with our nonprofit annual report template.

People tend to trust other people more than organizations, so leverage your network to spread the word about initiatives and educate others. 💡 Get free advice for your next annual report from Josh Kligman, Co-Founder + CEO of @yearlyreports. 💙 Join us virtually on August 18th at 12pm EST to learn time saving tricks for report creation, how to engage donors with storytelling, and more. 🎉 You’ll have plenty of opportunities to ask questions (and get real-time advice) to make your next annual report a success! Have you heard that paper is becoming scarce, impacting printing companies and the nonprofit organizations that depend on them for direct mail appeals? Be prepared for the possible hurdles this might throw your way, especially for the busy year-end season. We recommend planning ahead, keeping mailing lists updated, and considering ways your campaign can go digital.

Tax-Filing Tips For Nonprofits In The United States

In other words, revenues might be earned in an accounting period that is different from the period in which the cash is received. You can see on the template that with and without donor restrictions are grouped altogether, without breaking down the exact assets. If you want to better understand where these numbers are coming from, you can list each asset separately under the category. For example, if you collect membership dues, these can be listed under without restrictions, membership dues. The net assets section is essentially residual assets from current and previous years of operations.

financial statements for nonprofits

Finally, don’t forget to mention other places where readers can learn more. Include your website URL, phone number, address, and social media handles so potential donors can continue to learn more about your nonprofit. By showing readers that your accomplishments were achieved because of supporters, donors and volunteers know that you’re aware of all they do. Not to mention, it shows potential donors that your nonprofit is built on the support of passionate people. An Annual Filing, also known as a Form 990 or an Annual Information Return, is an annual financial report that nonprofits with 501 (tax-exempt) status must file with the IRS. This form isnotoptional; if an organization fails to file, it could be faced with penalties and eventually lose its tax-exempt status.

Advancing Missions Through Advocacy

An organization will receive a management letter if the auditor has comments for the board or financial management team. The comments are classified as “deficiency,” “serious deficiency,” and “material weakness,” and will give you a sense of the areas in which the organization can improve.

financial statements for nonprofits

In this report design, income is shown by source and subtotaled separately as earned and contributed. Restricted contributions and releases from restriction are shown separately from unrestricted operating activity. Give your supporters something to read while they enjoy their coffee! A newsletter is a great way to help your donors feel more involved and keep them up to date.


As we’ve mentioned before, your annual report is a chance to present all the good your nonprofit was able to accomplish. That being said, it’s easy for nonprofits to get stuck in the mindset of celebrating their accomplishments without focusing on their financial statements for nonprofits donors’ support. First, every successful nonprofit annual report has a clear purpose and audience that your organization needs to determine. How you further publicize it to your donors and stakeholders will depend on what you know about your audience.

If the charitable corporation’s revenue was between $25,000 and $250,000, it can pass a resolution to have a review instead of an audit. If the charitable corporation’s revenue was less than $25,000 it may pass a resolution to not have an audit or a review. A resolution to not have an audit or to not have a review must be passed by 80% of the members who vote on the resolution. Members who would not otherwise be entitled to vote can vote on these resolutions.

National Council of Nonprofits

Start with a solid understanding of nonprofit financial accounting principles. All nonprofits with $100K in annual contributions or over $250K in assets are required to file an IRS Form 990. The Form 990 is publicly available and can be found on the organization’s page or on nonprofit databases such as GuideStar.

A resolution to waive an audit and/or a review is only valid until the next annual meeting of members. At, we pride ourselves on being the number one source of free legal information and resources on the web.

In a non-profit organization, the statement of activities is used in lieu of an income statement. Nonprofits, just like any other organization, have financial activity. It’s very important for administrators to understand how financial reports are prepared and what reports are required. Additionally, there are different requirements surrounding reporting for non-profit financial statements. Here is a useful overview of common financial statements and how they are prepared. Nonprofit accounting is the process of recording, managing, and preparing compliant financial statements for 501 organizations. This includes everything from tracking income and expenses to tax returns and generating financial reports necessary for maintaining tax exempt status.

Cynder Sinclair: Irresponsible Board Destroyed Their Nonprofit – Noozhawk

Cynder Sinclair: Irresponsible Board Destroyed Their Nonprofit.

Posted: Wed, 31 Aug 2022 07:00:00 GMT [source]

For example, cash, investments, fixed assets, prepaid expenses, and accounts receivable all hold value. Note that our template shows the Statement of Financial Position with assets on the left, and liabilities and net assets on the right.

Non-Profit Financial Statements & Annual Returns

Auditors must present a statement on the finances of the corporation to the membership at the annual meeting. In this statement, the auditor verifies the accuracy of the financial records based on the information given to him or her. If the membership does not elect a new auditor at the annual meeting, the current auditor remains in that position for the next year. Depending on your organization’s financial history and practices, it may be a good idea to consider getting an independent audit.

  • 😊 Watch on-demand and download the presentation slides at the #LinkInBio.
  • Respond appropriately to requests for copies of financial reports, as required by the IRS public disclosure requirements.
  • By asking neutral questions of the organization, try to understand if the comments add up to a larger issue with the organization, or if they note problems that are not related to each other.
  • We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping.
  • Net Assets – organization’s net worth at a specific period of time.
  • An annual report is an effective way to close out the year by highlighting your achievements and thanking those who have helped you along the way.