This week we continue our exploration of nonprofit documents with a focus on financial documents.
There are several financial documents that apply to all nonprofits: budgets, statement of revenue and expense, cash flow statements, audited financial statements, balance sheets.
Titles of the various documents may differ from organization to organization, or from accounting program to accounting program.
Together, your financial documents are a meter of your organization’s financial health.
A Statement of Financial Activities is one of the most important financial documents. You may know this document by a different title: Income Statement, Budget Report, Profit & Loss Statement, Revenue & Expense Statement.
Regardless of what you call it, this document shows the nonprofit organization’s income and expenses for a specific period of time, usually a fiscal year. The report reflects the changes to an organization’s net assets resulting from income and expenses that occur during the current fiscal year. The changes in net assets are also reflected on a Balance Sheet.
Having good financial reports and documents, or being able to produce them, is just the first step. The leadership of your organization—staff and board—should be have a full understanding of what these documents show about your nonprofit. Combined, your financial documents are a snapshot of the financial health of your nonprofit organization—something donors and funders are always interested in knowing.
Learn more about your nonprofit’s financial documents at these resources.
Mission Box has this great article about five important financial documents for nonprofits: Five Important Financial Documents.