Nonprofit Statement of Activities: A Comprehensive Guide

Wednesday, April 22, 2026 by Jon Osterburg

While for-profit organizations focus on generating as much revenue as possible to maximize profits, nonprofits focus instead on raising additional revenue to further their missions. All of a nonprofit's funds should be reinvested into the organization and its mission, which can make accounting tricky.

For-profit accounting departments have a standard set of reports and statements they run to analyze their finances. Nonprofits have essentially parallel reports, but because their accounting is different, the reports differ slightly as well.

One of these central reports that nonprofit accountants create is the statement of activities, sometimes known as an income statement. In this guide, we'll walk through the basics of this accounting statement, covering the following topics:

• Nonprofit statement of activities FAQ
• Structure of the nonprofit statement of activities
• Nonprofit statement of activities template

Your organization works hard to raise funds and to use those funds to further your mission. Ensuring your reports are in check will help your nonprofit make the most of your finances moving forward. Let's dive in to learn more about the specifics of your nonprofit statement of activities.

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Nonprofit statement of activities FAQ

What is the nonprofit statement of activities?

The nonprofit statement of activities (or income statement) is a financial report that shows your organization's revenue and expenses over time, along with the corresponding change in your net assets. It's also used to categorize your nonprofit's revenue and expenses.

The purpose of the nonprofit statement of activities is to provide information about your organization's transactions and how those activities help further its mission.

When your statement of activities is complete, it will look something like this:

As you can see, the report is divided into revenue and expenses along the vertical axis. Horizontally, the revenue and expenses are further categorized by fund restrictions. At the bottom of the report, there is a section dedicated to net assets.

The numbers for your statement of activities are pulled from your organization's chart of accounts (COA), and the net assets are calculated using those numbers after they're put into the income statement itself. Therefore, you need to make sure that your accounting system is well organized from start to finish, or else you may have errors in your statement.

While for-profits need to compile a profit and loss statement along with their income statement, nonprofits can skip that step because they're not operating for profit. The statement of activities is simply to show how the organization is using its revenue and expenses to support its mission.

What's the difference between a statement of activities and an income statement?

The nonprofit statement of activities and the income statement are two different terms that refer to the same report.

The only difference between these terms is that "income statement" is more commonly used by for-profit organizations, while "statement of activities" is more popular among nonprofits. Many nonprofits find that the word "activities" better reflects their mission-driven focus and the fact that they bring in revenue from a variety of sources—not just earned income.

The term "statement of activities" is also more aligned with the names of the other three financial statements nonprofits compile than "income statement" is. These reports include the:

• Statement of financial position. Also called a balance sheet, this report breaks down your organization's assets and liabilities to provide a snapshot of its financial health.
• Statement of cash flows. This statement shows how cash moves in and out of your organization through operating, investing, and financing activities to help you stay on track with spending and fundraising.
• Statement of functional expenses. This report organizes your nonprofit's expenses into the categories of program, administrative, and fundraising costs so you can see how your expenditures are being used to further your mission.

Each of these statements summarizes the information found in your organization's COA differently, providing insights you can use to improve your financial management strategy.

Want to learn more about nonprofit financial statements? Use our easy cheat sheet!

Why is the nonprofit statement of activities important?

Nonprofits must compile an income statement every year to be in accordance with the Generally Accepted Accounting Principles (GAAP). However, there are other benefits of paying attention to your statement of activities, including:

• More effective resource allocation: The statement of activities can be incredibly helpful when your nonprofit is analyzing its finances and determining where those hard-earned fundraising dollars go. Just make sure that the line items in the statement match up with those in your organization's budget so your organization stays on target for your budgeted regular expenses.
• Long-term planning accuracy: By analyzing your nonprofit's statement of activities, your organization can determine if the expenditures currently allocated for each of your programs are sustainable for the long run. You can use this statement's information to better understand if now is the right time to cut expenses, provide membership discounts, or secure additional funding through a new revenue stream.
• Tax return assistance: You'll need to record information about your organization's expenses and revenue on your tax forms. Between your statement of activities and statement of functional expenses, you'll be all set to file your Form 990 accurately each and every year.

Your statement of activities secures your short and long-term success by ensuring GAAP compliance and a data-driven foundation for your planning efforts. As long as you ensure it accurately reflects all revenue, expenses, and changes in net assets over the reporting period, it can be a gamechanger for your nonprofit!

Structure of the nonprofit statement of activities

Your nonprofit statement of activities is broken up into several different sections. Vertically, it's split into revenue, expenses, and net assets; horizontally, it's split into your organization's unrestricted and restricted revenue. Let's take a look at these different fields:

Revenue

Nonprofits receive revenue from several different sources, all of which are essential to helping the organization pursue its mission. The majority of this revenue will be recorded as gross in your statement of activities. However, your investment returns should be recorded as net so you only account for the actual, spendable growth after related management fees have been deducted.

Some of the revenue sources that need to be recorded in the nonprofit statement of activities include the following:

• Cash contributions. When nonprofits raise money from individual donors, major supporters, and corporate partners, these are all considered cash contributions.
• Donated materials. Many nonprofits receive in-kind donations of goods and services to support their missions. While these may be more complex to record in your financial systems, it's still important to recognize these gifts' fair market values in your financial statements.
• Non-cash contributions. When individuals transfer assets like land and stocks to your organization, these contributions are still worth money, but don't quite fall under the category of "cash."
• Grants. Whether you're receiving money from the federal and state governments or a private foundation, you need to record your grant revenue in your statement of activities.
• Program fees. Many organizations receive a large portion of their funding as fees charged for their services. For instance, associations require members to pay fees to receive the benefits offered through the organization.
• Investment returns. Nonprofits can invest their funds in order to earn interest and multiply their revenue, just as individuals can. However, any funding brought in through this method needs to be reported on the income statement.

Finally, one of the categories often listed as revenue on your statement of activities is your net assets released from restriction. These are funds that you are now able to use as unrestricted revenue, although they may have been restricted in the past.

Revenue With Restrictions vs. Unrestricted Revenue

Sometimes, nonprofit revenue has restrictions placed on it by donors or funders. Restricted revenue must be used for a specific intended purpose. For example, granting organizations may require the funds provided to be dedicated toward a specific service or purpose. Meanwhile, unrestricted revenue can be allocated toward projects, operations, and other expenses as your nonprofit sees fit.

Also included in your restricted revenue is temporarily restricted revenue. These funds are restricted for a certain period of time; afterward, they can be unrestricted and used as the nonprofit sees fit.

The nonprofit statement of activities separates revenue with and without restrictions so that organizations can see their funding's flexibility, in addition to the final dollar amount.

Expenses

The expenses your organization incurs should all support your mission in some way, whether that's by funding daily nonprofit operations or a specific project relevant to your mission's purpose.

You're required by FASB 117 to report your expenses by functional classification, meaning you'll need to at least split up your expenses by administrative, fundraising, and program costs.

Some of the operational expenses you may incur include:

• Salaries and wages
• Insurance
• Rent and utilities
• Legal services
• Accounting services
• Supplies and equipment
• Fundraising needs (event planning, marketing, software subscriptions, etc.)

Meanwhile, program expenses vary drastically between nonprofits. For example, an animal shelter may incur program expenses such as:

• Medical supplies for animals
• Leashes, collars, toys, and crates
• Food and treats
• Training expenses

Generally, nonprofits try to limit their operating expenses as much as possible to lower their overhead. It's important to strike a balance between reducing overhead to fund your mission and ensuring you dedicate enough funding to continue expanding your organization.

Net Assets

The net assets featured on your nonprofit statement of activities are simply your expenses subtracted from your revenue. This calculation shows the equity of your nonprofit organization and whether you have the revenue to cover expenses and be sustainable long-term.

When evaluating your statement of activities for sustainability, pay attention to the net assets available to your organization under the "without restrictions" column. If you were to simply subtract the total expenses from total revenue without taking restrictions into account, you might have a false sense of security.

For instance, if your nonprofit has $55,000 in expenses and $65,000 in total revenue, it would appear that your net assets are positive, at $10,000. However, if $15,000 of your revenue is restricted, you're actually $5,000 in the red and should cut expenses to maintain a sustainable organization.

Nonprofit statement of activities template

Every nonprofit's income statement will look a little bit different. If you haven't seen one for your organization yet or want to try your hand at compiling one, use our template to get started.

Start organizing your revenue and expenses with our Nonprofit Statement of Activities Template

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Putting together this important resource can be challenging—not to mention verifying the numbers, interpreting your income statement, and determining the next actions that your organization should take based on the insights you glean.

To make this process easier, we recommend that your organization partner with a nonprofit accountant like the experts at Jitasa. Our team will meet you where you are in compiling your statement of activities, analyze your financial data, and make tailored recommendations to improve your revenue and expense allocation going forward.

Wrapping up

The nonprofit statement of activities is one of the core accounting documents that your organization creates. It allows you to see how your organization uses its funding to advance its mission and allocate resources. An accurate income statement does more than just record data—it's a tool for making data-driven decisions that can secure your nonprofit's future.

If you're interested in learning more about nonprofit accounting, the statements that you compile, and the insights you can find, check out the following resources:

• 12+ Top Nonprofit Accounting Firms & How to Choose One. Want to work with a nonprofit accountant? Start with our list of the top firms to consider.
• Restricted Funds: Everything Your Nonprofit Needs to Know. Dive deeper into the important designation of restricted vs. unrestricted funds that appears on the statement of activities.
• Working With a Nonprofit Accountant: What to Expect. Discover what it's like to work with a nonprofit accountant to compile your statement of activities and interpret your organization's financial data.

Work with the experts at Jitasa to compile your statement of activities.

Request a Quote