Non-profits, same as other organizations, have financial activity. So, as an administrator, you need to know how to make non profit financial statement excel template and what required reports.
Additionally, you should be aware of the accounting process to be compliant with all laws. So, you can ensure you are using the resources available. Finally, present an accurate picture of your organization’s finances to the board.
In short, the most convenient way to keep up with your financial needs is to have a Non-profit financial statement template.
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Understanding the Vocab/Terms of Non Profit Financial Statement
The non-profit organization has its key terms, just like any other community. Although, they share some similarities with for-profit as well.
An organization’s assets, liabilities, and owner equity as of any given date are listed on a balance sheet. Usually, a balance sheet is created after predetermined periods (e.g., every quarter; or annually). In a balance sheet, there are two columns. The company’s assets are listed in the column on the left.
But the main differences are income sources and their use limits.
So here are a few non-profit terms that might be confusing. To ease this confusion, here is a short vocabulary of commonly uses terms.
The liabilities of a non-profit organization refer to what the organization owes to others. Typically, they including debts, accounts payable, mortgages, and other obligations to pay.
Income, which comes from the merchandise or given services, is revenue. In brief, revenue sources will typically include grants, donations, dues for membership, investments, etc.
- Assets: Usually, assets refer to what is owned by the organization. Such as cash, stock, bonds, and equipment pieces.
- Net assets: Net assets are the collection of the difference between cumulative income less cumulative expenses.
Working of non-profit Financial Statement Templates in Excel.
Your business organization must have accurate and thorough accounting. Non-profit financial accounts provide openness, reveal the true worth of your organization, and indicate how successfully you have promoted your cause.
Fortunately, using excel templates may greatly simplify the numerous difficult chores involved in record-keeping. They may be made to make calculations automatically and speed up the data-entering process, saving a lot of time and work. In addition, when you are just starting and attempting to learn, templates help you become familiar with complicated accounting concepts day by day.
Whether your finance team uses accounting software or not, here are the template alternatives we will offer to assist you in mastering non-profit accounting!
- The budget (Annual & Program-based)
- Statement of Financial Position (SFP) (Balance Sheet)
- Activity Statement (Income Statement)
- Cash Flow Statement
- Statement of Functional and Natural Expenses
- Chart of Accounts and General Ledger
Using a non-profit budget worksheet, you may estimate your annual Income and expenses. Because it enables you to make crucial financial decisions on your organization’s future, your budget is also referred to as a business plan.
This non-profit budget template will define your allocations for fundraising, and timetables, as well as other factors, so it’s crucial to take the time to research thoroughly so that your projections are as correct as possible.
Your non-profit budget serves as a roadmap throughout the year to compare your actual outcomes to and helps you forecast decisions about the fund amounts required for your organization to expand and accomplish the goals of your cause.
This might help you assess your progress toward your objectives and financial obligations and identify what you need to do to ensure you reach or surpass those expectations.
While staff members can create this budget, it should be approved by your non-profit board of leadership to ensure that the values depicted within are consistent with your mission statement and growth directives. In addition, this budget is frequently a requirement when pursuing grant and funding opportunities.
To get you started, here are two budget templates.
Program-based budget: a budgeting tool where information is arranged around particular programs and services.
Annual budget: a worksheet that provides your overall financial strategy for a year.
Statement of Financial Position (SFP) (Balance Sheet)
A non-profit balance sheet is known as a statement of financial situation. Given the different organizational frameworks between for-profit and non-profit organizations, there are certain variances between the non-profit and for-profit versions despite their similarities. What is included and how assets are documented are the two key differences between a for-profit balance sheet and a non-profit statement of financial status.
Net Income is equal to Assets Minus Liabilities. This is the foundation of the statement of financial position, one of the more basic accounting formulas that give a quick overview of the crucial assets and liabilities that reflect how well your company is doing.
Liabilities are things you owe, whereas assets are things you have or anticipate getting.
You may calculate your net Income by comparing what you have/gain and what you spend. A positive figure indicates a profit, whereas a negative number indicates that you need to reduce expenditure or boost Income to go back on a sound financial footing.
For example, if your company had $60,000 from various revenue sources in a bank account but $70,000 in other expenses, your net assets estimate would come out to a worrying -$10,000: $60,000 (assets), $70,000 (liabilities), $10,000 (net assets)
This document is crucial because it gives you the best overall picture of your financial situation and lets you stay legally compliant. So you know how large an amount you have at your disposal is important. Your treasurer can help create this document, but the board will undoubtedly want to be informed of the outcome.
Activity Statement (Income Statement)
While non-profit organizations use a statement of activities, for-profit businesses create an income statement.
The non-profit statement of activities is largely concerned with where the revenue comes from and where it is being utilized, even if it shares some similarities with the statement of financial position in that it is concerned with assets and expenditures.
The main point to remember with this crucial financial report for non-profits is that donations are documented in two different ways:
- With donor limitations
- Without donor limitations
Your expenses are divided into two primary groups on the expenditure side of things:
- Report situations and funds used to support the programmes of your NGO.
- Development, management, and general costs incurred by your agency are examples of support functions.
Your board members may easily study this report’s information regarding the allocation of finances and expenses to identify trends and make crucial judgments about whether money has to be moved to new places.
Cash Flow Statement
No matter the type of business, all organizations need a cash flow statement to show how much is coming in and going out over a given period. Typically, this data is divided into three main categories:
- Investing activities
- Financing activities
- Operational activities
This report is important because many NGOs use it to track asset inflow and outflow patterns over a specific period. Overtime cash flow statements, for instance, can assist shed light on the spending and fundraising patterns of non-profits.
Together with the earlier reports, this financial perspective paints a complete picture of your NPO’s internal operations and paves the way for the gradual development of more precise budgets.
Your board, accountants, and analysts (if you’re fortunate enough to have them; non-profit finance department structures vary) will all want to keep an eye on these trends and decide what steps to take based on the direction of the trends and how the results change over time.
Statement of Functional and Natural Expenses
The Financial Accounting Standards Board mandates two different declarations, which comprise the Functional and Natural Expenses Statement, for non-profit organizations (FASB).
The categorical classification of expenses is used to organize functional expenses. Here are examples of the kinds of things that fall under the operational expenditures category:
- Program expenses
- Management fees
- General expenses
The following categorical types make up these results’ natural classifications, which are used to segment them further:
This paper is a crucial tool for demonstrating to funders or other interested parties how the non-profit’s inherent costs play a key role in supporting its tasks and services.
Chart of Accounts and General Ledger
A Chart of Accounts divides the account listings into several categories to keep some simplicity, making it simpler to access and analyze data.
Simple ledgers are sufficient for smaller non-profit organizations with fewer accounts to manage. There are possibly only five columns that list the transaction’s date and description, credit or debit details, and any changes to the account value.
Larger businesses will surely need more specificity and categorization criteria to make it simpler to identify, access, and retrieve relevant information quickly.
There will be five main categories in the non-profit chart of accounts. Transactions are grouped into these categories for the organization’s sake by allocating a number designation that is provided to the left of the categories listed below:
- Assets from 1000 to 1999 (what you own)
- Liabilities from 2000 to 1999 (what you owe)
- Net Assets from 3000 to 999 (your net worth)
- 4000–4999 in Income (money coming in)
- 5000–9999 Costs (money flowing out)
The ledger and chart may be helpful for budgeting and financial reporting and offers a great approach to preserving your accounts when correctly set up and presented.
Types of donor restrictions
Generally, in non-profits, restricted funds refer to the donations meant to use for specific projects or purposes. Sometimes, a donor wants the funds to go to a specific purpose. So, on the basis of restrictions, there are three types of donations:
Unrestricted donations: Non-profits can use these funds for any purpose.
Temporarily restricted funds: These funds are only for designated purposes.
Permanently restricted funds: Only the interest which comes from these funds can be used on charitable activities.
The Process of Preparing Financial Statement Template Excel
Generally, financial statements are crucial for non-profits to maintain transparency. In this case, the accounting cycle’s proper order ensures that organizations’ financial statements are accurate, consistent, and follow the official accounting standards.
In short, the accounting cycle concept ensures that all the cash passing through your organization is actually “accounted” for. A non-profit should have a non-profit organization’s financial template available to its staff.
So, they can make a statement in the appropriate layout. A non-profit organization needs to prepare the following financial statements:
The Financial Position Statements
The SOP is a snapshot of your organization’s finances. Moreover, it shows the speed at which they convert to cash, listing assets and liabilities.
The Activities Statement
This statement shows the revenue and expenses of a nonprofit organization for a specif period. Also, it shows how a non-profit’s assets change over time.
The Functional and Natural Expenses Statement
As the name shows, this statement lists expenses by function. Such as administrative expenses, program expenses, and fundraising expenses.
Furthermore, this statement also lists expenses by type, such as rent and utilities, salaries, benefits, etc. See the non-profit financial statement template example here.
The Cash Flows Statements
This statement reflects how the cash is coming in and going out in a specific period. Whether in a year, a month, a quarter, or generated on demand for a defined period.
It is another crucial component of a basic non-profit financial statement template excel. The cash flow statement typically has three sections depending on the non-profit’s revenue sources. For most non-profits, this implies net cash from:
Operating activities: such as cash fees from fee-for-free activities or unrestricted funds raising activities.
Investing activities: such as earnings from the sale or purchase of equipment.
Financing activities: such as earning from redeeming bonds etc.
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Accounting Methods for Tracking Funds
Non-profit accounting involves accountability. So, a non-profit should be careful in properly account for funds that it receives from various sources.
Because funding for non-profits comes from foundations or the public, a non-profit should focus on accounting for those funds. To track funds carefully, a non-profit should choose between two accounting types:
Cash Basis Accounting
The cash basis lets non-profits to track their income and expenses when they receive payment physically. This method records expenses at the payment time, so you need to calculate at the year-end.
You can use a cash basis if you run a small business, for instance, a sole trader or partnership and have a turnover of £150,000 or less a year. If your business turnover of £300,000 per year, it will not work for you. Easily make an income statement for your organization by downloading our Income Statement template.
Accrual Basis Accounting
Accrual basic accounting is an accounting method that records revenues and expenses when an invoice is sent out, regardless of when the payment is paid or received.
Understanding Form 990
Individuals and companies need to pay taxes every year using complex forms, but non-profits do not. Because non-profit organizations are exempt from tax, it does not mean that tax season is easy. They still need to file a form 990.
IRS Form 990 is a tax document that tax-exempt organizations file each year to maintain their exempt status. in brief, Form 990 allows the IRS and the public to evaluate non-profits’ financial information and how they work.
Moreover, it collects information about the finances, mission, and programs of tax-exempt organizations. It also gives every non-profit chance to report its accomplishments each year to maintain its tax-exempt status.
You can download the non-profit balance sheet template here.
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Create a Non Profit Financial Statement in 5 Steps
Here are five easy steps to create a financial statement for your organization:
Firstly, ist all funds you are getting from all revenue sources. This listing will help you manage your expenses in a better way. Use non-profit financial statement templates Xls to list out all the funds.
Manage your outgoing expenses such as salaries, social services, charity, and social awareness to understand better where your revenues are spending and how to reduce them.
Generally, operational costs refer to the amount spent on the products, equipment, and services your organization provides to the public. Our financial statement templates set up your operational costs for each year.
While making a non-profit financial statement template in excel, you must mention all expenses (management expenses, rent, utilities, etc.) and income (gifts, fees, fundraising, etc.).
Financial statements help organizations to run smoothly, as it gives a better understanding of your finances throughout the year. They are thus resulting in keeping finances under control.
You can download our free financial statement template here.
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Download Non Profit Financial Statement Templates
Here are Non Profit Financial Statement Templates that you can download for free.
Top 5 Frequently Asked Questions about Non Profit Financial Reports
There are many questions in the FAQ list of 10+ Free Non Profit Financial Statement Templates in Excel However, the top 5 and the basic ones are:
The statement of financial activities shows the non-profit’s income and expenses for a certain period. Also, it shows the changes to an organization’s net assets and expenses during the current year.
The statement of position acts as the balance sheet of the non-profit.
Those five financial statements include financial position statements, statement of cash flow,statement of change in equity, income statement, and the Noted to financial statements.
The “statement of financial position” SOP is balance sheet for non-profits.
A company’s management or head creates the company’s financial statements.
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