Glossary
Financial Reporting

Statement of Financial Position

By: Alec Hollingsworth
Updated:  
June 2, 2025

DEFINITION:

A Statement of Financial Position is a financial report showing an organization’s assets, liabilities, and net assets at a specific point in time.
A Statement of Financial Position, also known as a balance sheet, is a financial report that presents an organization’s assets, liabilities, and net assets at a specific point in time. This statement provides a snapshot of what the organization owns and owes, as well as the residual value belonging to its stakeholders or, in the case of nonprofits, its mission. For nonprofits, net assets are divided into categories such as unrestricted, temporarily restricted, and permanently restricted, reflecting donor-imposed stipulations. The Statement of Financial Position is a critical tool for assessing the overall financial health of a nonprofit and making strategic decisions about budgeting, fundraising, and resource allocation. It is usually prepared annually, but can also be generated more frequently for ongoing monitoring and reporting purposes.

Key Takeaways

  • Shows assets, liabilities, and net assets at a snapshot in time
  • Essential for assessing a nonprofit’s financial health
  • Helps ensure transparency and accountability
  • Supports strategic planning and compliance

Why It Matters

It helps nonprofits track financial health, plan budgets, and demonstrate accountability to stakeholders.

Real World Example

A small animal rescue nonprofit uses Aplos to generate a Statement of Financial Position at the end of each fiscal year. The report clearly shows their cash, equipment, outstanding bills, and designated funds for specific programs. When applying for a grant, the organization includes this statement in their application to demonstrate financial stability and responsible stewardship of funds. The grantor reviews the report, sees that the nonprofit maintains stable net assets and manages its liabilities prudently, and approves the funding request based in part on this transparency.

How Aplos Helps

Aplos enables nonprofits to easily generate their Statement of Financial Position with accurate real-time data. The platform’s fund accounting features ensure that net asset classifications are clearly reported, helping organizations meet reporting standards and donor requirements.
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Frequently Asked Questions

What is the difference between a Statement of Financial Position and a balance sheet?

They are essentially the same; 'Statement of Financial Position' is commonly used by nonprofits, while 'balance sheet' is the term used in for-profit accounting.

Why does a nonprofit need a Statement of Financial Position?

It provides a clear view of the organization’s financial standing and is required for annual reporting, audits, and grant applications.

How often should a Statement of Financial Position be prepared?

Most nonprofits prepare one annually, but it can also be generated quarterly or monthly for internal management and board review.

What are net asset categories in a nonprofit Statement of Financial Position?

Net assets are typically categorized as unrestricted, temporarily restricted, or permanently restricted based on donor stipulations.

Can I generate a Statement of Financial Position in Aplos?

Yes, Aplos makes it easy to create this financial report with accurate fund balances and classifications.

Related Terms

Encumbrance
Double‐Entry Accounting
Donor Advised Fund
Donation Receipt
Cost Center
Board‑Designated Fund

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