Financial Statements
Nonprofit Financial Statements Examples
Review coordinated nonprofit financial statement examples covering financial position, activities, functional expenses, cash flows, and the reconciliations that connect them.
Nonprofit financial statements examples are most useful when the reports connect. The statement of activities explains the change in net assets, the statement of financial position shows the ending balances, the cash-flow statement explains cash movement, and functional-expense reporting shows how natural costs supported program, management, and fundraising functions.
The examples below use one simplified organization and illustrative amounts. They are educational, not a complete set of financial statements, audit guidance, tax-return instructions, or a substitute for the organization’s applicable reporting requirements.
Example 1: statement of financial position
| Assets | Amount | Liabilities and net assets | Amount |
|---|---|---|---|
| Cash and cash equivalents | $112,000 | Accounts payable and accruals | $31,000 |
| Contributions and program receivables | $48,000 | Refundable advances | $12,000 |
| Prepaid expenses | $6,000 | Long-term debt | $35,000 |
| Property and equipment, net | $94,000 | Total liabilities | $78,000 |
| Net assets without donor restrictions | $122,000 | ||
| Net assets with donor restrictions | $60,000 | ||
| Total assets | $260,000 | Total liabilities and net assets | $260,000 |
The statement balances, but each line needs support. Cash agrees to bank reconciliations, receivables to grant or billing schedules, fixed assets to a register, liabilities to vendor, payroll, advance, and debt detail, and net assets to restriction and activity rollforwards.
Example 2: statement of activities
| Activity | Without donor restrictions | With donor restrictions | Total |
|---|---|---|---|
| Contributions and grants | $138,000 | $70,000 | $208,000 |
| Program-service revenue | $96,000 | $0 | $96,000 |
| Other income | $3,000 | $2,000 | $5,000 |
| Net assets released from restrictions | $42,000 | ($42,000) | $0 |
| Total revenue and support | $279,000 | $30,000 | $309,000 |
| Program services | ($198,000) | $0 | ($198,000) |
| Management and general | ($43,000) | $0 | ($43,000) |
| Fundraising | ($26,000) | $0 | ($26,000) |
| Change in net assets | $12,000 | $30,000 | $42,000 |
If beginning total net assets were $140,000, the $42,000 change produces ending net assets of $182,000. That agrees to $122,000 without donor restrictions plus $60,000 with donor restrictions on the first statement.
The restriction release appears as a positive $42,000 in one class and negative $42,000 in the other, producing no change in total revenue and support. The release still needs evidence that the donor-imposed purpose or time restriction was satisfied.
Example 3: statement of functional expenses
| Natural category | Program | Management and general | Fundraising | Total |
|---|---|---|---|---|
| Salaries and benefits | $112,000 | $24,000 | $14,000 | $150,000 |
| Occupancy and technology | $28,000 | $9,000 | $3,000 | $40,000 |
| Program materials and assistance | $44,000 | $0 | $0 | $44,000 |
| Professional fees | $6,000 | $6,000 | $2,000 | $14,000 |
| Travel, depreciation, and other | $8,000 | $4,000 | $7,000 | $19,000 |
| Total expenses | $198,000 | $43,000 | $26,000 | $267,000 |
The column totals equal the functional expense lines in the statement of activities. The row totals provide the natural classification. Shared-cost allocations should use documented methods connected to actual resource use, not percentages selected to produce a preferred program ratio.
Example 4: cash-flow bridge
A complete statement of cash flows has required classifications and presentation under the applicable framework. The compact bridge below only illustrates why the $42,000 change in net assets does not equal the cash increase.
| Illustrative bridge | Amount |
|---|---|
| Change in net assets | $42,000 |
| Add depreciation | $12,000 |
| Increase in receivables | ($9,000) |
| Increase in payables and accruals | $6,000 |
| Purchase of equipment | ($22,000) |
| Debt principal repaid | ($8,000) |
| Illustrative net increase in cash | $21,000 |
Depreciation reduced the change in net assets without a current cash payment. Receivable growth delayed collection. Equipment and principal payments used cash but were not ordinary current-period expenses in the same way.
Notes and supporting schedules
Numbers alone do not form a complete reporting package. Notes may describe the organization, significant accounting policies, liquidity, restrictions, commitments, contingencies, concentrations, debt, leases, investments, related parties, subsequent events, and other material matters.
Management schedules should support cash, contributions and grants receivable, conditional awards, property and equipment, payables, payroll, refundable advances, debt, leases, net assets, and functional allocations. Restricted net assets benefit from a beginning-additions-releases-ending rollforward by restriction.
How to prepare coordinated reports
- Close each source stream and reconcile every control account.
- Review grants, gifts, and contracts for conditions, restrictions, and revenue timing.
- Update receivables, prepaids, fixed assets, payables, accruals, debt, and leases.
- Record supported restriction releases and functional allocations.
- Run all statements using the same entity, period, basis, and consolidation settings.
- Reconcile statement totals to the trial balance and supporting schedules.
- Cross-check change in net assets and cash between reports.
- Document management and board review before distribution.
Questions for board review
- How much liquid cash is available without donor restrictions?
- Which restricted balances are expected to be released, and for what activities?
- Are receivables collectible, conditional, or concentrated?
- Which expenses are recurring, allocated, or one-time?
- Why did cash change differently from net assets?
- Are debt, lease, grant, or contractual commitments approaching?
- Do actual results differ materially from budget and prior periods?
Frequent inconsistencies
Warning signs include total expenses differing between statements, ending net assets not agreeing to the balance sheet, restricted releases lacking schedules, cash-flow totals not agreeing to cash, and comparative reports using different bases or periods. Other errors are contribution receivables without award support, deposits recorded directly to revenue, and fixed-asset purchases remaining in supplies expense.
Example 5: net-assets rollforward
A net-assets rollforward connects the activity report to the statement of financial position. It should be maintained by class and, for donor-restricted resources, by material restriction or fund.
| Rollforward | Without donor restrictions | With donor restrictions | Total |
|---|---|---|---|
| Beginning net assets | $110,000 | $30,000 | $140,000 |
| Current-period change | $12,000 | $30,000 | $42,000 |
| Ending net assets | $122,000 | $60,000 | $182,000 |
The ending amounts agree to the first example. A more detailed restricted schedule would show beginning balance, new gifts or grants, investment activity where applicable, releases, transfers permitted by the governing documents, and ending balance for each restriction.
Example 6: liquidity view for management
Total net assets are not the same as money available for next month’s payroll. Management can prepare a supplemental liquidity schedule that starts with financial assets available in the near term and subtracts amounts unavailable because of donor restrictions, contractual limits, or internal designations. The exact disclosures and definitions should follow the applicable framework.
| Illustrative management liquidity view | Amount |
|---|---|
| Cash and current receivables | $160,000 |
| Less donor-restricted for longer-term or other purposes | ($52,000) |
| Less board-designated reserve | ($20,000) |
| Illustrative financial assets available for general near-term use | $88,000 |
A board designation differs from a donor restriction because the board can generally reconsider its own designation through the proper governance process. The schedule should never imply that receivables are immediately spendable without considering collection timing.
Comparative and budget columns
Monthly management statements often add prior-year and budget columns. Compare like periods and explain whether budgets include restricted awards, capital purchases, or noncash expenses. A variance may reflect timing rather than performance, so pair numerical thresholds with documented operational explanations.
Do not change classifications in the current period without recasting or clearly explaining prior-period comparisons. A functional allocation or restriction-release policy applied differently between columns can create a false trend.
Board materials can add selected operational measures, such as people served or program units delivered, but define the period and source. Financial cost per unit becomes unreliable when the service count and expense total cover different programs or time frames.
Keep those measures supplemental to the reconciled statements.
The nonprofit financial statements guide explains the package in more depth. Review the nonprofit statement of activities guide for revenue and expense details. For recurring board-ready reporting, see financial reporting services.
Frequently asked questions
What are the main nonprofit financial statements?
A general-purpose package commonly includes statements of financial position, activities, cash flows, and functional expenses or the related information, plus notes.
Are these examples the same as Form 990?
No. Financial statements and tax or information returns have different purposes, classifications, instructions, and presentation.
Why are net assets split into two classes?
The split distinguishes resources without donor restrictions from resources subject to donor-imposed restrictions under the applicable reporting framework.
Does a positive change in net assets mean cash increased?
No. Receivables, payables, noncash expenses, asset purchases, debt, and other balance-sheet activity can make the amounts different.
Are functional expenses the same as natural expenses?
No. Function describes purpose, such as program or fundraising. Natural classification describes the cost, such as salaries or rent.
Can management use a simpler internal version?
Yes, provided it reconciles to the books, labels its basis and scope, and does not replace required external presentation without appropriate review.
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