What is the purpose of the statement of activities in a nonprofit organization?

The statement of activities in a nonprofit organization serves to show the financial performance over a specific period. This document captures all revenues earned and expenses incurred by the nonprofit within a defined time frame, typically a fiscal year. It details how the organization has utilized its resources to achieve its mission, reflecting the net change in net assets which helps stakeholders understand the organization's financial sustainability and operational effectiveness.

This statement is crucial for assessing how well a nonprofit is managing its resources, identifying sources of revenue, and controlling expenses. By providing a comprehensive view of the activities during the accounting period, it allows for a better understanding of the financial health and operational outcomes of the organization, facilitating informed decision-making by board members, donors, and other stakeholders.