What Is a Statement of Activities? A Guide for Nonprofits

A statement of activities is the nonprofit world’s equivalent of the income statement—a central financial report showing how an organization’s resources flow through its mission. For nonprofits, it is indispensable for communicating transparency, supporting audits, securing grants and donations, and ensuring sound financial management throughout the fiscal year. This guide demystifies the statement of activities, walking through its purpose, structure, nuances, and practical tools for easier reporting. Tools like Holdings for Good make all this seamless—visit holdingsforgood.com to discover how virtual accounts, zero-fee banking, and real-time tracking can transform nonprofit finance.

What Exactly Is a Statement of Activities?

At its core, this document is the nonprofit version of the income statement or profit and loss statement. Unlike for-profits, which report net profit, nonprofits use the statement of activities to show how donations, grants, fundraising, and other sources of revenue are received and spent over a given accounting period—providing a transparent summary of their financial activities, sustainability, and stewardship.

The statement typically covers revenues, expenses, and changes in net assets. It’s a required report for Form 990 filings with the Internal Revenue Service, audits, and compliance with the Financial Accounting Standards Board (FASB) and generally accepted accounting principles (GAAP). For many nonprofit organizations, it’s the foundation for sound management, donor trust, and planning.

Why It Matters for Nonprofits

Transparency is at the heart of nonprofit finance. Donors, grantmakers, management, boards, auditors, and regulators all need to know where money came from, how it was used, and whether those uses align with the mission. Unlike a corporate finance report, the nonprofit statement of activities must document cause-driven funding—restricted funds, grants, in-kind donations, program service fees, fundraising event proceeds, investment income, and more. It also reveals the organization’s cost structure—payroll, advertising, depreciation, research and development, rent, liability, debt payments, overhead, and direct program activity.

Major uses:

• Supporting grant requests, fundraising appeals, and donor relations with candid, comprehensive financial data

• Meeting audit and compliance requirements for accurate financial reporting, often using accounting software

• Strategic planning, forecasting, and management by segmenting funds and assets by program, grant, or purpose

• Demonstrating stewardship and effective financial management during a financial audit, board meeting, or IRS filing.

Holdings provides tools to segment cash automatically, manage virtual accounts, and integrate seamlessly with bookkeeping and accounting software—making grant tracking, expense management, and financial reporting easier than ever.

Structure and Key Components

Here’s what a complete statement of activities includes:

• Revenues: Donations, grants, government contracts, investment income, fundraising event proceeds, retail sales, program service fees, and accounts receivable payments.

• Expenses: Payroll, salaries, advertising, cost of goods sold, overhead, fundraising costs, program expenses, depreciation, liabilities, interest expense, research and development, accounts payable, rent or lease payments, and other related costs.

• Net Assets: The change in total assets minus total liabilities, shown as increases or decreases in unrestricted, temporarily restricted, and permanently restricted net assets.

• Other vital data: Information on earnings before interest and taxes, net income, gross margin, equity, tax obligations, interest payments, net profit, and earnings per share (for entities with shares outstanding).

Sample Statement of Activities Table

Organizations typically include two columns: one for unrestricted activities (core operations, admin), and one for restricted funds (grant-specific, program-specific, donor-directed accounts). This segmentation allows for easy reporting by grant, purpose, or fund, supporting compliance and audit trails.

How Nonprofits Use the Statement of Activities

Nonprofits leverage this statement for a wide range of critical financial activities:

• Annual audits and financial reviews

• Filing IRS Form 990 and other tax documents

• Grant funding reports and compliance documentation

• Budgeting, forecasting, and strategic financial planning

• Fundraising and donor transparency

• Tracking income, revenue streams, expenses, and changes in assets and liabilities

• Reviewing cash flow and management of restricted funds

• Comparing multiple programs, locations, or initiatives at once

Additional reports—balance sheet, cash flow statement, chart of accounts, and the functional expenses breakdown—support and complement the statement of activities.

Connection to Other Key Financial Statements

The statement of activities doesn’t stand alone: it connects to the balance sheet (statement of financial position), cash flow statement, and functional expenses. Together, these documents provide a full picture for financial analysts, accountants, and nonprofit management:

• Balance Sheet: Shows assets, liabilities, and net assets at a given date. Accounts receivable, accounts payable, loans, investments, and other cash or equity positions are tracked here.

• Cash Flow Statement: Reports actual movements of cash—cash flows from operating activities, investing, and financing—revealing liquidity and sustainability.

• Functional Expenses Statement: Breaks out expenses by program, administration, and fundraising, supporting compliance, grant reporting, and strategic management.

Holdings for Good automates segmentation so that operating, investing, and financing activities can be tracked across virtual accounts, making detailed reporting both fast and accurate.

Practical Example: Annotated Statement of Activities

Suppose “Community Arts Bridge,” a 501(c)(3), runs two major programs funded by grants plus general donations. Its statement might look like:

Net Assets Movement Table

Annotations:

• Every entry in revenue or expense is tied to a real source—grant, donation, sale, investment, event, or account.

• Every grant and restricted fund is specifically tracked for compliance and reporting.

• Changes in net assets show increases (surplus) or decreases (deficit) over the accounting period.

• Net assets roll forward between accounting periods.

This clarity helps finance teams satisfy audit requirements, donor requests, funder reporting, and management research. Holdings supports this level of transparency and segmentation—delivering accurate data, audit-ready documentation, and integrated solutions for accounting software like QuickBooks and Sage Intacct.

Managing and Creating Statements of Activities

Whether using a full-featured accounting software suite, Excel workbook, or all-in-one platform like Holdings, nonprofits need both accuracy and ease. Here’s how to streamline statement management:

Step-by-Step:

• Gather all data: Pull bank records, cash flow reports, accounts receivable, accounts payable, and transaction lists from accounting software or payroll tools.

• Segment transactions: Allocate each income, donation, or expense by source—unrestricted, restricted, grant, program, or fund. Tools like Holdings handle this automatically.

• Input data: Load categorized data into a statement of activities Excel worksheet, which supports formulas for assets, liabilities, equity, and revenue recognition. Wise use of charts and reporting cash flows shows trends at a glance.

• Review and reconcile: Ensure that statements agree with cash flow, balance sheet, and supporting documentation. This is critical for audits, transparency, and Form 990 filings.

• Report and share: Export, print, or upload reports for funders, board members, donors, management, and the IRS. Use Holdings’ integration for streamlined reporting, or the worksheet linked below for manual entry.

Downloadable Statement of Activities Excel Worksheet

Download your fillable Statement of Activities Excel worksheet here:

Download Worksheet

The worksheet is pre-structured for nonprofit financial statements:

• Clearly marked sections for unrestricted and restricted funds

• Pre-populated categories for typical nonprofit revenues and expenses

• Formula-driven fields for total assets, liabilities, net income, and equity

• Example tab for easy customization

Designed for use with your organization’s chart of accounts, budget, and payroll records—fully compatible with most accounting software platforms, and ready for internal or external audit, compliance, grant reporting, and management forecasting.

Unlocking the Power of Holdings for Good

Holdings meets nonprofits exactly where they are—whether using basic Excel bookkeeping, Sage Intacct, QuickBooks, or no accounting system at all. With Holdings, nonprofits gain:

• Zero-fee banking with a 2% return on balances for added sustainability

• Virtual accounts for segmenting cash by grant, program, or restricted fund—no more spreadsheet headaches

• Virtual and debit cards for safe, easy team spending—like modern P-cards

• Powerful expense management tools that track, approve, and sort spending by grant or initiative automatically

• Seamless bookkeeping services to keep everything clean, compliant, and audit-ready

• Direct integration and easy exports for fast reconciliation with your accounting software

• Grant, fundraising, and donor management tools for real fundraising impact

• Always-ready documentation for audits, Form 990 filings, and ongoing board/management research

No matter if the team is one person, a grassroots effort, or a CFO-led nonprofit with complex fiscal year cycles, Holdings helps improve reporting, reduce errors, protect grants, and build trust with every donor and funder.

Try Holdings for your organization today at holdingsforgood.com.

Frequently Asked Questions

How is the statement of activities different from the income statement? Both show revenues and expenses over a period, but nonprofits must track fund restrictions—i.e., money earmarked for specific programs, grants, or purposes. This adds complexity to financial reporting and compliance, particularly when handling restricted funds, grants, and donor-imposed requirements.

What’s required for Form 990 and audits? The IRS requires a statement of activities to document annual nonprofit financial activities: donations, grants, program income, expenses, payroll, taxes, and assets or liabilities. Auditors use this for compliance with FASB and GAAP.

How do virtual accounts help? Virtual accounts—like those from Holdings—let organizations split cash by grant, program, or fund, making every line of the statement easier to report and audit, no matter what accounting software is used.

Getting Started: Create, Review, and Improve

Start by downloading and customizing your Statement of Activities Excel worksheet.

Input transactions, segment your cash flow, and use Holdings to streamline the rest.

Build trust with donors and funders, support strategic planning, and gain actionable financial insights. Whether tracking payroll, forecasting fundraising, or reporting for audits, accurate, transparent nonprofit financial statements are key to sustainability and success.

Contact Holdings with any questions, requests for support, or to improve your financial management. Visit holdingsforgood.com for tools, resources, and expert help.