Running a nonprofit means wearing a lot of hats. You rally donors, plan events, manage staff, and keep the mission moving. Financial reporting is rarely the highlight of anyone’s day, yet it’s one of the most important hats you wear.

The statement of activities is one report you can’t afford to ignore. As a key financial report for nonprofits, it provides a clear overview of your organization’s financial performance and accountability.

The statement of activities is also one of several core nonprofit financial statements that together offer a comprehensive view of your organization’s financial health.

Here’s a straightforward look at what it is, why it matters, how to build one, and how to use it to make smarter decisions. You’ll also find a free template to help you get started.

What Is a Nonprofit Statement of Activities?

In its simplest form, a statement of activities records everything your nonprofit earns and spends over a period of time, often a month, quarter, or fiscal year.

It lists your revenue streams, your expenses, and the resulting change in net assets (your “bottom line”). Unlike for-profit businesses, nonprofits use the term “net assets” instead of “profit” or “net income,” and they focus on how their activities further the mission rather than on shareholder returns.

Many people still call it an income statement, but the term “statement of activities” better reflects the broad range of programs and fundraising efforts at work. The statement of activities is also referred to as a 'nonprofit income statement' and serves as the nonprofit equivalent of a 'profit and loss statement' used in the for profit world.

While for profit organizations focus on generating profits and reporting net income, nonprofits do not aim to generate profits but instead reinvest revenue to further their mission. Nonprofit accounting has unique requirements and standards that differ from for-profit accounting, emphasizing transparency and accountability in financial reporting.

This report doesn’t stand alone. It’s one of four essential statements nonprofits prepare. The other three? The balance sheet, the cash flow statement, and the statement of functional expenses. Together, they tell the full story of your financial health.

Why the Statement of Activities Matters

Transparency and Donor Trust

Nonprofits rely on donors, grantors, and members for support. These stakeholders want to know that their contributions are used responsibly and that the organization is financially stable.
A clear statement of activities shows where money comes from and how it’s spent, building confidence with donors, grantmakers, and board members.
Post it alongside your annual report or have it ready when supporters ask for it.

Compliance and Reporting

You’re required to provide a statement of activities when you file Form 990. Auditors, state agencies, and foundations often request this report to verify that your organization is following accounting standards and fulfilling reporting obligations.
Keeping accurate statements reduces the risk of penalties and ensures you remain in good standing with regulators.

Real‑Time Decision‑Making

This report is a tool your leadership team can actually use to make decisions. The statement of activities enables leaders to make informed decisions about resource allocation and future planning.

Think of it as a dashboard. By comparing revenue and expense categories, you’ll spot trends and act before they become problems. Did program expenses spike last quarter? Are unrestricted donations growing or shrinking? The statement of activities helps you answer those questions quickly.

Say your summer camp program ran at a deficit last year. With this report, you’ll see the shortfall in time to adjust tuition rates, find a sponsor, or trim costs before next season.

Structure of a Nonprofit Statement of Activities

The statement is organized into three main sections: income, expenses, and net assets. Each section is further broken down by fund.

Revenue (Income)

This section captures everything that comes into the organization:

Cash contributions from individuals, corporate partners, or major donors.
In‑kind donations like donated goods, professional services, or volunteer time. Record the fair market value so both revenue and expenses are accurate.
Non‑cash gifts such as stocks, vehicles, or real estate that you can sell or use.
Grants from government entities, foundations, or companies. Label them restricted or unrestricted.
Program service revenue from membership fees, admission fees, tuition, or service fees.
Investment income like interest and dividends.
Net assets released from restriction, which represent funds that were previously restricted and are now available for general use after meeting donor conditions.

Always track whether income is unrestricted, temporarily restricted, or permanently restricted. Donor restrictions tell you how and when you can spend the money.

Expenses

Expenses must be grouped by function (program, management and general, and fundraising) and by nature (salaries, rent, supplies, etc.):

Program expenses include anything that directly advances your mission like curriculum materials for a youth program, food for an animal rescue, medical supplies for a clinic.
Management and general expenses cover administrative costs like office rent, insurance, staff salaries, software, and professional services.
Fundraising expenses relate to donor stewardship, events, marketing, and grant writing.

Separating expenses this way helps you understand how much you spend on operations versus direct program delivery. It also keeps you compliant with accounting standards.

Net Assets

At the bottom of the report, you calculate the change in your organization's net assets by subtracting total expenses from total revenue.

This tells you whether your organization ended the period with a surplus or deficit. The change in the organization's net assets is a key indicator of its financial health. Net assets are also divided into:

Net assets without donor restrictions, which can be used for any mission-related purpose.
Net assets with donor restrictions, which may have time or purpose requirements.

Resource allocation decisions are made based on the organization's net assets to ensure that both unrestricted and restricted funds are used effectively to support the organization's mission.

Monitoring the organization's net assets closely is crucial. You might appear to have a positive bottom line, but if most of your revenue is restricted, your unrestricted cash could still be negative.

Sustainable nonprofits aim to grow their unrestricted net assets while honoring donor restrictions. Regularly monitoring the organization's net assets helps ensure resources are available to advance the organization's mission.

How to Prepare a Statement of Activities

Ready to build your own statement of activities? Follow these steps:

Set up a clean chart of accounts. If your accounts aren’t organized, start by using the Aplos Chart of Accounts Template. A clear structure makes it easier to categorize revenue and expenses correctly.
Collect revenue data. Gather information on all donations, grants, program fees, investment returns, and non‑cash gifts. Make sure to note whether each revenue stream has restrictions.
Collect expense data. Compile all expenses for the period. Label them by function (program, administrative, fundraising) and by natural category (salaries, rent, supplies, etc.). Be consistent with any allocations you use.
Calculate the change in net assets. Add up your revenues, add up your expenses, and subtract expenses from revenue. Do this separately for unrestricted and restricted funds to see where your deficits or surpluses occur.
Use a template. To make life easier, grab the free Statement of Activities Template. It comes with built‑in formulas and prompts so you can plug in your numbers without fuss.
Consider software. A spreadsheet is a good place to start, but accounting software designed for nonprofits can generate statements automatically. Fund accounting systems keep donor‑restricted funds separate, generate statements of activities and other reports with a few clicks, and integrate with donation management tools, saving you hours of manual work.

Statement of Activities Example

Here’s a simple example of how your statement might look:

This section is where you record income and expenses linked to their accounts and funds.

Tips for Analyzing Your Statement of Activities

Once your statement is complete, use it to guide your decisions:

Compare against your budget. Are you bringing in less revenue than expected? Spending more on fundraising? Catch variances early so you can adjust.
Look for trends. Review statements over several periods. Do unrestricted donations decrease after big campaigns? Are program costs rising faster than income?
Evaluate program sustainability. Does each program generate enough revenue to cover expenses? If not, consider revising fees, seeking sponsorships, or reducing costs. If program costs consistently exceed revenue, you may need to cut expenses to maintain positive net assets and ensure long-term sustainability.
Monitor your overhead. Don’t starve your operations, but make sure administrative costs aren’t crowding out mission spending. Monitoring operating activities is essential to ensure resources are used efficiently and to support sound financial management.
Use other statements. Pair the statement of activities with your balance sheet and cash flow statement to see your overall financial position and liquidity.

Common Mistakes to Avoid

Keep your statement clean and compliant by avoiding these common errors:

Mixing up restricted and unrestricted funds. Use proper fund accounting to keep things separate and clear.
Leaving out in‑kind gifts. If a company donates office furniture or a consultant donates time, record it.
Inconsistent time frames. Always use the same reporting period across all statements.
Using business templates. For‑profit P&L statements don’t accommodate restricted funds. Use templates built for nonprofits.
Ignoring reconciliations. Reconcile bank statements and double‑check totals. Small mistakes can lead to big discrepancies later.

Additional Resources & Next Steps

Grab the free Statement of Activities Template and start building your own report today.
Need a clearer snapshot of assets and liabilities? Download the Nonprofit Balance Sheet Template.
Organize your accounts with the Nonprofit Chart of Accounts Template.
Want to automate your reporting? Explore Aplos Fund Accounting Software and Nonprofit Reporting Software.
If bookkeeping isn’t your favorite hat, Aplos Nonprofit Bookkeeping Services can handle the work for you.

Conclusion

A clear, accurate statement of activities lets you see where every dollar comes from and where it goes.

It helps you track donor restrictions, manage programs, and communicate with your board + supporters. By keeping your report up to date and reviewing it regularly, you’ll build trust and make smarter decisions.

Ready to get started? Grab the free template and create a statement of activities that works for you. If you’re ready to move beyond spreadsheets, check out Aplos software for an easier way to track funds, generate reports, and focus on what matters most: advancing your mission.

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Frequently Asked Questions

Are a statement of activities and an income statement the same?

Yes, they both summarize revenue and expenses over a given period. Nonprofits prefer “statement of activities” because it emphasizes how funds advance the mission, not profit.

How often should I prepare this report?

At a minimum, you’ll need a statement of activities each year for your Form 990. Many nonprofits review it quarterly, and some look at it monthly to stay on top of their finances.

Where do I share the statement?

Include it in your annual report or audited financial statements. You can also share it directly with donors, board members, or post it on your website.

What’s the difference between restricted and unrestricted revenue?

Unrestricted revenue can be used for any mission‑aligned purpose. Restricted revenue comes with conditions. You must spend it on a specific program or at a certain time. Once the conditions are met, temporarily restricted funds become unrestricted.