Nonprofit Statement of Activities: What It Shows and How to Build One

A nonprofit statement of activities is the nonprofit equivalent of an income statement. It reports all revenue and support for the period, all expenses by function, and the resulting change in net assets, presented separately for net assets with donor restrictions and without donor restrictions. It is required under FASB ASC 958, it covers a period rather than a point in time, and its bottom line is a change in net assets rather than profit, because a nonprofit has no owners to earn it.

If you have arrived here because a board member asked why the statement does not say "net income", or because a grantmaker asked for a statement of activities and QuickBooks gave you a profit and loss, this is the reconciliation. Below is what belongs on the statement, how the two net asset columns work, the release of restrictions that trips up almost everyone, and how to produce the thing without a bespoke spreadsheet.

What goes on a statement of activities?

Three blocks, in order. Revenue and support comes first: contributions, grants, program service fees, membership dues, special event income, investment return and any other inflow. Expenses come second, and here nonprofit presentation diverges sharply from commercial practice, because expenses are reported by function rather than only by nature. The third block is the change in net assets, which is revenue minus expenses, followed by beginning net assets and ending net assets so the statement reconciles to the balance sheet.

Functional presentation means every dollar of expense is assigned to program services, management and general, or fundraising. Salaries do not appear as one line called salaries; they appear inside those three buckets. This is what lets a donor calculate the program expense ratio, and it is why the separate statement of functional expenses exists to show the natural categories and the functional categories together in a grid.

The statement covers a period, typically a fiscal year with the prior year alongside. Its counterpart, the statement of financial position, reports balances at a single date. Together with the statement of cash flows and the statement of functional expenses they form the four-statement set described on our nonprofit financial statements page.

What is the difference between net assets with and without donor restrictions?

Net assets without donor restrictions are funds the organization can spend on any mission-related purpose at the board's discretion. Net assets with donor restrictions are funds a donor has limited by purpose, by time, or permanently, such as a grant that must be spent on a specific program, a pledge earmarked for next fiscal year, or an endowment whose principal must be preserved. The distinction is set by the donor, not by management, and internal board designations do not create a donor restriction.

FASB simplified this in ASU 2016-14, collapsing what used to be three classes (unrestricted, temporarily restricted, permanently restricted) into the current two. Older templates and older board members still use the retired vocabulary, which is a common source of confusion when someone compares this year's statement to one from a decade ago.

How do restricted funds get released?

When the organization satisfies a donor restriction, by spending the money on the stated purpose or by reaching the stated date, the amount moves out of net assets with donor restrictions and into net assets without donor restrictions. On the statement of activities this appears as a line commonly titled "net assets released from restrictions", showing as a positive number in the unrestricted column and an equal negative number in the restricted column. The two offset, so the release never changes total net assets.

This is the mechanic people get wrong most often, and it produces a specific, recognizable symptom: a statement showing a large surplus in the restricted column and a matching deficit in the unrestricted column, or vice versa, with a board asking why the organization lost money on operations when it clearly did not. The revenue was recorded as restricted when it arrived, the expenses hit the unrestricted column when it was spent, and nobody posted the release.

The fix belongs in the bookkeeping, not in the reporting. Grant revenue must be recorded to the correct class when received, program spending must be coded so the qualifying expenses are identifiable, and the release entry must be posted each period. A statement generator can only present the classes your ledger actually distinguishes.

How do you make a statement of activities in QuickBooks?

QuickBooks Online has no native statement of activities, so the standard approach is to build it from the profit and loss report. Set the nonprofit-oriented company type so the reports use nonprofit labels, then use classes for functional categories (program, management and general, fundraising) and either a second dimension or separate income accounts to track the donor restriction. Running a profit and loss by class gives you the functional grid; our guide to running a QuickBooks profit and loss by class covers getting that export clean.

Where this breaks down is the restriction dimension. QuickBooks Online gives you classes and locations, and most nonprofits spend both: one on function, one on restriction or on funding source. Add a third dimension, such as grant-level tracking, and you are into workarounds, sub-classes or a dedicated fund accounting system like Aplos, Sage Intacct or FastFund. Know which of those two dimensions you need before you design the chart of accounts, because retrofitting it mid-year is painful.

Once the export is right, the assembly is mechanical. Upload the trial balance or transaction file and AIStatements produces the statement of activities, statement of financial position and cash flows together, tied to each other, with the net asset roll-forward reconciling. What used to be an evening of spreadsheet work before every board meeting becomes a review step.

How should a board read it?

Point the board at four things and skip the rest. First, the change in net assets without donor restrictions, because that is the number that tells you whether operations are sustainable; a healthy-looking total surplus can hide an unrestricted deficit funded by a one-time restricted grant. Second, revenue concentration: if one grant is forty percent of support, that is a risk item whatever the surplus says.

Third, the program expense ratio, because it is what donors and watchdog sites calculate anyway, and you should know the number before somebody else quotes it at you. Fourth, the trend against the prior year, line by line, since a statement of activities read in isolation says very little. Boards absorb this far better as a short narrative with a few charts than as a dense grid, and turning the finished statements into a clean slide deck for the meeting takes minutes once the numbers are settled.

One honest caveat: this article explains presentation, not compliance. Restriction classification, revenue recognition on conditional grants under ASU 2018-08, and functional allocation methodology all involve judgment, and an organization approaching an audit threshold should have a CPA who does nonprofit work review the approach. Upload an export above to see the statement set your own books produce, then take that draft to your accountant rather than a blank page.