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Nonprofit Statement of Cash Flow | ModVenturesLLC

The Guide to Your Nonprofit Statement of Cash Flow

March 20, 2024

For nonprofits, your financial statements are essential for staying organized, providing transparency, and sharing a journey for your donors (and potential donors) to reference. One statement that your organization shouldn’t go without is your nonprofit statement of cash flow. 

To get a better understanding of what your nonprofit statement of cash flow looks like and the role it plays in your nonprofit, we’re going to touch on some of the main aspects. Let’s break down your nonprofit statement of cash flow:

What is a Nonprofit Statement of Cash Flow?

A nonprofit statement of cash flow is a financial statement that details cash inflows and cash outflows – showing how money moves in and out of your organization. 

Cash flows are sorted into three categories: operating activities, investing activities, and financing activities. This includes things such as employee salaries, receiving donations and grants, buying and selling long-term assets, and loans.

A statement of cash flow is typically prepared after your Statement of Financial Position and Statement of activities but before your statement of Functional Expenses.

What is the Importance of a Cash Flow Statement?

There are many reasons why a cash flow statement or statement of cash flow is important to your nonprofit organization. In addition to providing transparency and a general understanding of your finances, a nonprofit statement of cash flow is important for:

  • Determining when to invest in new programs, initiatives, and activities.
  • Assist in setting and managing your short-term and long-term budget.
  • Improve your accountability as an organization.
  • Providing information for financing activities.

Luckily, your nonprofit’s statement of cash flow is one of the easier statements to put together and maintain. 

How to Prepare Your Statement of Cash Flows

Your statement of cash flows is often generated through your bookkeeping and accounting software, although it can be done manually. You should record any changes in net assets, including additions and subtractions to cash, cash from investing activities, cash from financing activities, and your ending balance. 

All your information should be compiled into one report that is easy for others to navigate and understand. 

But, if you would like to make preparing and organizing your financial statements easier for your nonprofit organization, connect with us at ModVentures and we can start working with you and your org today!


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