Manage Net Assets
Net assets take the place of equity in the balance sheet, since there are no investors to take an equity position in a nonprofit.
Manage Donor Restrictions
Net assets are classified as being either with donor restrictions or without donor restrictions. Assets with donor restrictions can only be used in certain ways, frequently being assigned only to specific programs. Assets without donor restrictions can be used for any purpose.
Manage Program Revenue and Expenses
A nonprofit exists in order to provide some kind of service, which is called a program. A nonprofit may operate a number of different programs, each of which is accounted for separately. By doing so, one can view the revenues and expenses associated with each program.
Cost Management and Administration Classification
Costs may be assigned to the management and administration classification, which refers to the general overhead structure of a nonprofit.
Donors want this figure to be as low as possible, which implies that the bulk of their contributions are going straight to programs.
Organize and Report Fund Raising
Costs may be assigned to the fund raising classification, which refers to the sales and marketing activities of a nonprofit, such as solicitations, fund raising events, and writing grant proposals.
Financial Statements
The financial statements produced by a nonprofit entity differ in several respects from those issued by a for-profit entity. For example, the statement of activities replaces the income statement, while the statement of financial position replaces the balance sheet. Both for-profit and nonprofit entities issue a statement of cash flows. Finally, there is no nonprofit equivalent for the statement of stockholders' equity, since a nonprofit has no equity.
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Help WEGY6 introduce new ideas, approaches, and strategies.
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