All businesses (including non-profit organizations) must produce a financial statement at least annually, and often quarterly. This financial statement includes a balance sheet, an income statement, and a cash flow report, and possibly other supporting documents. These various reports will spell out the financial activities of the organization during that time period, detailing all income and cash outflows including operating expenses, salaries, and the like.
The financial statements of non-profit organizations are pretty much the same as those of for-profit companies, but the amounts allocated to the operational activities can be very different depending on the structure and activities of the organization.
Tips For Non-profit Organization Financial Statement Analysis
First, take the time to research the sector the non-profit operates in and their mission and activities. Understanding the mission and the basics of their operations will help you understand their financial statement. A Boy's Club type organization, for example, might seem to have high assets relative to their operating budget as they own a couple of buildings and several fields, but have to get by on a very limited annual budget with municipal or county funds.
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