How to Calculate a Cash Flow Statement for a Nonprofit Organization
Cash-flow statements are detailed documents that reveal how much money is going into a business and how much the company spends each month in operations and production. Nonprofit organizations also use cash-flow statements to track how much the organization gets through donations and fundraisers and to examine how much the nonprofit requires for daily operations and programs for the public. Nonprofit board members must calculate cash-flow statements to ensure the nonprofit is using all funding in the best possible manner.
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Instructions
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Collect accurate income figures from the accounting department to learn how much the nonprofit has in annual income. Nonprofit income does not come in the form of sales income, but rather from donations, potential sponsors and fundraising events.
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Add up the total annual income for the cash-flow sheet, but keep each income stream separate on the statement. This shows exactly where the nonprofit earns the bulk of the income, which is useful for future planning and development.
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Examine all of the operating expenses the nonprofit has each month. Operating expenses include common utilities, rental fees for the nonprofit office, computers, printers, program costs, equipment fees and salaries. These are expenses that the nonprofit requires each month to offer services and programs, so these must be treated as such.
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Add up any additional costs associated with running the nonprofit organization. These may include costs associated with fundraising events and flexible expenses such as business cards, website maintenance and related costs.
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Add up all expenses and add up all income figures to get two solid numbers. Subtract the expense number from the income figure to get the total cash-flow balance. A negative balance indicates that more money is flowing out of the business than coming in. A positive number indicates that the nonprofit is earning more than it is spending, meaning it can spend more on programs, research and services.
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Tips & Warnings
Avoid subtracting tax expenses if the nonprofit organization has tax-exempt status granted by the Internal Revenue Service. This is not a given status, as nonprofits must apply for it.
