Glossary
Financial Reporting

Statement of Cash Flows

By: Alec Hollingsworth
Updated:  
June 2, 2025

DEFINITION:

A Statement of Cash Flows is a financial report showing how cash moves in and out of a nonprofit through operating, investing, and financing activities.
The Statement of Cash Flows is a core financial report that details the cash inflows and outflows of an organization over a specific period. It categorizes cash activities into operating, investing, and financing activities, providing a clear picture of how cash is generated and used. For nonprofits, this report is crucial in demonstrating how donations, grants, and other income sources are translated into expenditures supporting programs and operations. The Statement of Cash Flows complements the Statement of Activities and Statement of Financial Position, offering transparency into an organization’s liquidity and its ability to meet short-term obligations. This report helps stakeholders evaluate financial health, sustainability, and stewardship over contributed funds.

Key Takeaways

  • Shows how cash enters and leaves the organization
  • Divides cash flow into operating, investing, and financing sections
  • Highlights liquidity and financial stability
  • Essential for transparency with stakeholders

Why It Matters

It reveals how well an organization manages its cash, ensuring financial stability and transparency.

Real World Example

A nonprofit animal shelter receives grants, donations, and membership fees as income. Throughout the year, it spends cash on veterinary supplies, staff salaries, and facility maintenance. Using the Statement of Cash Flows, the shelter can show that while net income might be positive, actual cash decreased due to the purchase of new equipment (investing activity). This report helps the shelter’s board understand its cash position, ensuring they have enough liquidity to pay bills and manage unexpected expenses, and demonstrates responsible stewardship to donors and grantors.

How Aplos Helps

Aplos simplifies the creation and analysis of the Statement of Cash Flows by automatically tracking cash transactions and categorizing them for accurate nonprofit financial reporting. Users can quickly generate this report in Aplos to share with boards, donors, and auditors, ensuring compliance and transparency.
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Frequently Asked Questions

What is the purpose of a Statement of Cash Flows?

It provides insight into how cash is generated and used by a nonprofit, helping stakeholders assess liquidity and operational health.

How does the Statement of Cash Flows differ from the Statement of Activities?

The Statement of Cash Flows tracks actual cash movement, while the Statement of Activities focuses on revenues and expenses regardless of cash timing.

Can Aplos generate a Statement of Cash Flows automatically?

Yes, Aplos can automatically create this report by tracking and categorizing your nonprofit's cash transactions.

Related Terms

Grant Lifecycle
IRS Form 990
Stewardship
State Charitable Registration
Donor Advised Fund
Statement of Activities

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