Free · Certificate included
Reading Financial Statements
Read your nonprofit’s financials with confidence and ask the right questions.
What you’ll learn
- Read a nonprofit budget and balance sheet
- Tell apart the four core financial statements and what each one answers
- Understand net assets with and without donor restrictions
- Spot warning signs in the numbers
- Ask the financial questions a board should ask
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Create a free account →Course outline
- 1
Why a board member reads the numbers
You joined the board to advance a mission — not to become an accountant.
5 min Quiz Interactive - 2
Statement of Financial Position (the balance sheet)
The Statement of Financial Position — what a for-profit calls a balance sheet — is a snapshot of one moment in time.
6 min Quiz Interactive - 3
Net assets: with and without donor restrictions
Here is the single most important nonprofit-specific idea in the whole packet.
6 min Quiz Interactive - 4
Statement of Activities & Functional Expenses
If the balance sheet is a snapshot, the Statement of Activities is the movie of the year.
6 min Quiz Interactive - 5
Cash flow & two ratios every board should know
The Statement of Cash Flows tracks actual cash moving in and out, sorted into operating, investing, and financing activities.
6 min Quiz Interactive - 6
Budget vs. actuals & reading the Form 990
Most board financial packets include a budget vs.
5 min Quiz Interactive - 7
The questions a good board asks
You don’t need to interrogate the staff. A handful of calm, recurring questions, asked every time the financials come up, will do more for oversight than any…
4 min Interactive
Sources & further reading
- Financial Accounting Standards Board (FASB) — ASU 2016-14: Presentation of Financial Statements of Not-for-Profit Entities
- Propel Nonprofits — Balance Sheet Cheat Sheet & Glossary of Financial Terms
- Nonprofit Finance Fund — Best Practices for Nonprofit Financial Health: Top 3 Measures
- National Council of Nonprofits — Federal Filing Requirements for Nonprofits (Form 990)
- Candid (Learning) — Where can I find an organization’s Form 990?
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