Nonprofit balance sheet: How to read yours (& free template!)

Nonprofit balance sheets give you clear insights into your organization's financial health at a single point in time, including how much debt you have and what your cash reserves look like. A balance sheet looks simple at first, but many changemakers struggle to know how to create or interpret them.

In this guide, we'll explain everything you need to know about nonprofit balance sheets, how to create one, and how to understand what they show you. We've also included a free nonprofit balance sheet template that you can use as the foundation for your own.

Key takeaways

• Useful for formal reporting and audits ✔️ Your balance sheet shows your organization's current assets, liabilities, and net assets.
• A snapshot in time, not a full picture ⛰️ Your balance sheet explains your finances now, rather than how they've changed over time.
• Helpful for decision making 💼 Understand your nonprofit's liquidity and debt at a glance, so you can make more strategic decisions.
• Get organized with Givebutter 🧈 Create better links between your fundraising tools and your accounting software with Givebutter Wallet, free donation management features, and a QuickBooks integration available with Givebutter Plus.

What is a balance sheet for a nonprofit organization?

A nonprofit balance sheet is a one-page overview of your organization's financial health as a snapshot in time. It details your current assets, liabilities, and net assets in an easy-to-read document.

Nonprofit balance sheets help leadership, finance teams, and nonprofit auditors understand how your organization operates, what funds are available or owed, and how much funding is restricted vs. unrestricted.

You might also hear a nonprofit balance sheet described as a "nonprofit statement of financial position."

Why does a nonprofit need a balance sheet?

Balance sheets offer nonprofit decision-makers a clear view of their financial position in real time. Instead of comparing previous data or predicting future trends, it reflects the most up-to-date information.

Balance sheets are also useful for transparency and auditing. While a balance sheet isn't required for nonprofit annual reporting, including one promotes trust with your supporters.

More to explore

Discover a step-by-step guide to nonprofit budgets →

Download your free nonprofit balance sheet template

All you need to draft a nonprofit balance sheet is a spreadsheet. To make it even easier, download our free, expertly created nonprofit balance sheet template.

You'll get an editable template with step-by-step instructions and an example of a completed balance sheet so you can build your own with confidence.

Freebie alert!

Download your free nonprofit balance sheet template →

How to prepare a balance sheet for a nonprofit organization

Creating a nonprofit balance sheet is straightforward once your financial data is ready. Follow the steps below and fill out our free nonprofit balance sheet template as you go.

1. Categorize your assets & liabilities

A balance sheet organizes financial information into three sections: assets, liabilities, and net assets. Before you complete your balance sheet, make sure you group these items correctly.

Many nonprofit organizations include the following:

Assets

• Cash and cash equivalents
• Contributions receivable
• Prepaid expenses
• Investments
• Property and equipment (net)
• Total assets

Liabilities

• Accounts payable
• Accrued expenses
• Deferred revenue
• Loans payable
• Total liabilities

Net assets

• Net assets without donor restrictions
• Net assets with donor restrictions
• Total net assets

The number of categories and how you label them depends on how you typically receive and spend funds, but the groups above are a good starting place.

Dive deeper

Get the beginner's guide to nonprofit accounting →

2. Separate restricted & unrestricted funds

In the example above, and in our free template, you'll notice that net assets are split into restricted and unrestricted funds. While unrestricted funds offer more flexibility, restricted funds can be used only for the purpose for which they were originally given, not for general costs.

It's important to keep the two fund groups separate for donor compliance and to ensure your team has accurate financial data.

Separating restricted and unrestricted funds in your balance sheet allows you to:

• Understand the ratio between the two groups
• See how much funding is available for general spending
• Make data-informed decisions about growth and spending

More to explore

Make reporting easier with a streamlined chart of accounts →

3. Fill in your nonprofit balance sheet

Many nonprofit accounting software platforms automatically generate a balance sheet based on your data and reporting requirements. If yours doesn't, or if you'd prefer a standalone version, our free template is ideal.

Start by listing your assets, liabilities, and net assets. Add your organization's branding and adjust formatting so it's ready to share with your board or auditors.

💡 Pro tip: Connect your fundraising platform to QuickBooks Online and your balance sheet stays current automatically. Givebutter's native QuickBooks integration, available with Givebutter Plus, syncs donation data directly to your chart of accounts.

How to read a nonprofit balance sheet

A nonprofit balance sheet gives you a snapshot of an organization's financial health at a moment in time. Here's how to interpret the data to better understand your nonprofit's finances:

• Cash on hand (liquidity) 💲 Your balance sheet clearly states how much cash is available in your accounts, allowing you to make decisions about purchases or investments.
• Assets available 💰 Identify what percentage of your assets are tied up in property or long-term investments versus how much you have in the bank.
• Debts 💳 Review your liabilities and assess whether debt obligations are sustainable for your organization. Ideally, your liabilities should be less than 50% of your total assets.
• Historical comparison 📈 Compare your current balance sheet with past versions to identify trends in assets, liabilities, and available cash.
• Financial warning signs 🚨 Watch for red flags like rising debt, declining income, low cash reserves, or excessive restricted funds.

More to explore

Present your financials with confidence using this free treasurer report template →

Sample nonprofit balance sheet

To help you understand what this all looks like in practice, we've created a sample balance sheet for a fictional nonprofit organization.

Here's what a balance sheet might look like for a regional nonprofit organization that's focused on animal welfare:

🔎 What this nonprofit balance sheet example shows: There's a healthy amount of cash available, but liabilities represent just over 54% of total assets—slightly above the recommended 50% threshold. This suggests the nonprofit should prioritize reducing debt or liabilities before taking on new financial commitments.

This example is intentionally showing a nonprofit that needs to keep an eye on its debt levels. Not a model to replicate, but a useful illustration of what to watch for in your own balance sheet.

More to explore

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Get clear on your finances with Givebutter

Your nonprofit balance sheet provides a snapshot of your organization's financial health, but it's even more effective when paired with other financial statements—like your statement of activities and cash flow statement—to give a clear view of your broader financial position. Together, these documents help leadership make smarter decisions, prepare for audits, and build trust with donors and funders.

Givebutter helps centralize your nonprofit finances with Givebutter Wallet, robust donation management tools, and a native QuickBooks Online integration available with Givebutter Plus to streamline financial workflows. When your fundraising data flows directly into your accounting system, reconciliation gets faster, errors decrease, and your balance sheet stays accurate without the manual lift.

Sign up for Givebutter today to simplify donation tracking and financial reporting.

FAQs about balance sheets for nonprofit organizations

How is a nonprofit balance sheet different from a for-profit balance sheet?

While they share a similar purpose, the language used in nonprofit and for-profit balance sheets differs. For example, in a nonprofit balance sheet, you'll see "net assets," but in a for-profit balance sheet, this would be categorized as "equity." Nonprofit balance sheets also uniquely separate restricted and unrestricted funds, record pledges, and include donations made in advance that cover multiple years.

What is a nonprofit balance sheet called?

A nonprofit balance sheet is also called a statement of financial position, which is its more formal name. These two terms can be used interchangeably.

What are net assets on a nonprofit balance sheet?

Net assets are the funds that your nonprofit organization has available after liabilities are accounted for. This figure represents your total assets minus your total liabilities, similar to the net worth or equity of a for-profit business.