Top 2 NonProfit Financial Reports

Now more than ever is a great time to be a nonprofit!  Stewarding the financial resources of each mission driven organization is critical.  Today I’m going to share the two most important reports you may see as a nonprofit leader or board member.

Report One: The Balance Sheet

The balance sheet is the financial Report that shows the balances of three things.

• Assets: Everything You Own
• Liabilities: Everything You Owe
• Net Assets: Net asset is a term used to describe the difference between what you own minus what you owe. Net assets should show what's available for the mission, explain the purpose of those funds, and if there are any restrictions. To learn more about Net Assets, click here!

Your balance sheet should include the current period and the prior period and the net change.  The change column is an important indicator of activity. 

Report Two: Budgeted Financial

Budgeted financial reports can come in various titles and represent the income and expense activity. The most common terms used for this is Profit And Loss Statements. Profit and Loss statements show all your income minus your expenses, resulting in your net income, net loss (or net surplus, or deficit).

This type of Report is needed to compare what actual results looked like compared to your budgeted plan. On a monthly basis you would compare the budget to the actuals for the month. It is also highly recommended to include the budget for the actuals for the fiscal year.

Budgeted Financial Reports are helpful because;

1. It shows if you are on track to make your revenue goals.
2. It shows your progress towards your fundraising goals.
3. It reminds you that a change in income ( up or down) needs to translate into your expenses.
4. It shows if spending is on track. Over and under spending are both important indicators to watch. 

The budgeted financial Report gives an excellent indicator of whether or not things are on target and can help you identify trends, patterns, and concerns before they happen.

Whether you are a nonprofit leader or a board member, add these reports to your monthly review.  Invest time each month to look at them. Ask questions and each month you will grow in your understanding of the financials!