Nonprofits are essential to our communities. They provide a wide range of services, from education and healthcare to social services and environmental protection. In order to operate effectively, nonprofits need to be able to track their income and expenses. A nonprofit profit and loss statement is a financial statement that shows a nonprofit’s revenues and expenses over a period of time, usually a year.
A nonprofit profit and loss statement can be used for a variety of purposes, including:
- Tracking the organization’s financial performance
- Making informed decisions about the organization’s programs and services
- Attracting donors and grants
There are many different nonprofit profit and loss statement templates available online. However, it is important to choose a template that is specific to your organization’s needs.
Revenue
The revenue section of a nonprofit profit and loss statement shows all of the organization’s income. This income can come from a variety of sources, including:
- Donations
- Grants
- Membership fees
- Program fees
- Investment income
It is important to note that not all revenue is created equal. Some revenue, such as donations, is unrestricted and can be used for any purpose. Other revenue, such as grant funding, may be restricted and can only be used for specific purposes.
Expenses
The expenses section of a nonprofit profit and loss statement shows all of the organization’s costs. These costs can be divided into two categories: program expenses and non-program expenses.
- Program expenses are costs that are directly related to the organization’s programs and services. These expenses can include salaries for program staff, supplies, and equipment.
- Non-program expenses are costs that are not directly related to the organization’s programs and services. These expenses can include administrative costs, such as salaries for administrative staff, rent, and utilities.
It is important to track both program and non-program expenses in order to get a complete picture of the organization’s financial performance.
Net Income
The net income section of a nonprofit profit and loss statement shows the organization’s net income or loss for the period. Net income is calculated by subtracting total expenses from total revenue.
- A positive net income indicates that the organization has more revenue than expenses. This excess revenue can be used to fund future programs and services or to build up the organization’s reserves.
- A negative net income indicates that the organization has more expenses than revenue. This can be a sign that the organization is not operating efficiently or that it is not generating enough revenue to cover its costs.
Nonprofit profit and loss statements are an important tool for managing a nonprofit organization. By tracking their income and expenses, nonprofits can ensure that they are operating efficiently and that they are meeting their mission.
