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What is a Non Profit Financial Statement?
A non-profit financial statement is a document that relays all the revenues and expenses of a non-profit organization at a particular time or year. It is a way how the nonprofit will be transparent about all the grants that they received. Through the statement, the non-profit can be given a chance to thrive because they can assess their stand regarding financial matters. A non-profit audited financial statement is important for the organization because it relies upon grants or funds that can enter the organization. The statement will be a great help in how they can assess whether they are doing good with their business or not.
The financial statement contains the liquidity of all the non-profit assets. Non-profit organizations can know their monthly financial position through the statement. Because of it, they will be able to set donor restrictions. It is a great way how they can analyze every endowment fund that they received. It is important to balance their income and their expenses. A statement representation can make things easier for them to observe if they are doing good with their financials. It is a complete representation of the balance sheet, net assets, and cash flow.
If non-profit organizations will not make an income statement, they will not examine whether the money that they are getting is truly going to the expenses of the program. They need a statement that can make everything transparent. It can be standard for nonprofits to create a non-profit financial statement. This way, they can know whether they are having a good financial projection. Financial analysis should be made so that they can have their money to its best. The money that they have can be audited through the non-profit financial statement.
Fund accounting is needed as you make a non-profit financial statement. It will be easier for non-profits to fix and set their budget through the statement. They will know if they are not doing good with their financials and they can correct their mistake. They can check the remaining budget that can be left for them. It is good to monitor the non-profit’s financial reports and projections monthly. This way, you can ascertain that your organization will not be lacking in terms of money. You can ensure that all the grants will be well spent. If a non-profit wants to handle its financials well, the non-profit financial statement is the answer.
Components of a Non Profit Financial Statement
Are you doing a non-profit financial statement search? Do you know how to prepare non-profit financial statements? Maybe you want to know the components of a non-profit financial statement. Well, we can provide them for you. They are the following:
Ho to Create a Non Profit Financial Statement
Are you looking for a non-profit financial statement template or a non-profit financial statement example? Are you looking for them because you are about to create a non-profit financial statement? If that is your problem, we can help you. We can provide some steps for you that you can use in creating a financial statement. Consider and apply the following:
Step 1: Document Your Grants
The first thing that you have to do is to list all the money that is going into the pocket of your organization. You have to document all the non-profit grant proposals that you have received. You should do this over an annual period or a fiscal year. These grants may come from donations, fundraising, and sponsorships. Though they may differ each month, you have to diligently list them all. You can have a chart that shows your monthly revenues. Add up all your income for the whole year. This way, you can monitor your money and you will not spend on unnecessary expenses.
Step 2: Record Outgoing Funds
The next thing that you have to do is to create a place for outgoing funds. You must know how much money is going out of the pocket of your organization. This can include the wages of your staff. You must add how much you can spend for salaries on the whole year. You must know your expenditures so that you will know how you can reduce them. Other expenditures can be the money that you are spending on social service, brand awareness, and charity.
Step 3: Calculate Operational Costs
The next thing that you have to do is to calculate the operational costs. You must know how much money do you spend on all your operations. Without these expenses, your organization will not function. You can have monthly expenses like rental fees and utility bills. Every month, add up these expenses. Then, calculate how much have you spent for the whole year.
Step 4: Subtract Expenses from Income
After calculating the operational costs, you must calculate all your income and expenses. After that, you must subtract your expenses from your income. Get an expenses sum by adding all your expenses for the year. Then, subtract this from your income for the whole year. If you will get a negative amount, it will only mean that you need more funding for your organization. Your organization can be in some debt and has to pay some expenses. But the good thing is you can work it out so you can get additional funding. So, this makes a non-profit financial statement necessary.
Step 5: Make a Conclusion
You can understand the matters of your financial projections by having a non-profit financial statement. You can control your finances whether you are doing good or not. You will know where the income of your organization goes. Everything will be transparent and you can ensure that all funds go to the right things.
What can you benefit from a non-profit financial statement?
A non-profit financial statement can give you a lot of benefits. You can be transparent with all the money of the organization. You cannot afford that there can be an anomaly regarding funds that you have gathered. To avoid corruption in any way, you should secure a financial statement that can show where all the money is going. Without a financial statement, some may be tempted to steal the money. To avoid unwanted theft, everyone should be transparent about the money of the organization. You have to calculate your total revenues and keep a record of them. Everyone should report how many donations and grants they can get for your organization. Keeping a record of them will ensure that no money will be lost. As you calculate the total income, you should also calculate your total expenses. This is how you will know if there will be money left for your other programs. Keep a record of everything so that you can monitor the money that is entering your organization. Another benefit is you can assess all your financials. You will know whether you are lacking funds. You will know if your expenses will be more than the funds. In that case, you can act if you need to gather more funds. You will know the financial feasibility analysis status of your organization through the statement.
Is a non-profit financial statement necessary?
Yes, it is necessary. It will be easier for you to monitor the funds that are entering your organization. It will be easier for you to know whether you are having enough funds or not. You can also use it in filing taxes. The statement is very important because it can help you to analyze your financial projections. It helps you make a financial plan and apply all financial strategies. Financial analysis is needed so that you can handle the financials of your organization well.
When it comes to finances, non-profit organizations can experience the same challenges that ordinary businesses have. Both of them have a flow of income and a set of expenses. To be sure that they can handle their financials well, they need a financial statement that can help them in analyzing their financial needs. In the case of a non-profit, it should secure a non-profit financial statement. It can help it to run its business smoothly. The funds will be enough for all its programs. It can even have an excess of it. Well, are you looking for a template for a non-profit financial statement? This post has 8+ SAMPLE Non Profit Financial Statements in PDF. If you need it, you can select any from the templates. Download now!