1. The balance sheet is a snapshot of an organization’s financial position at a specific point in time. This report shows what a nonprofit owns and owes on a particular date.
  2. Look at the relationship between current assets and current liabilities to help determine whether the organization has enough resources available to pay its obligations over the next 12 months. If the current liabilities get close to or exceed the current assets, this is an indicator action is needed.
  3. All board members should receive and review the organization’s balance sheet monthly. Review the balance sheet for anything unusual or any unexpected balances.
  4. Develop and implement a reserve policy and monitor whether or not the organization is meeting established targets. Reserve funds are for use in case of unexpected expenses, planned future events, or emergent programmatic opportunities.

Here are some questions to think about...

  • After reviewing your organization’s most recent balance sheet, what can you say about your organization’s financial picture? What questions do you want to ask at the next board meeting?
  • For your nonprofit, what types of unexpected expenses, planned future events, or programmatic opportunities could reserve funds support?

Next steps...

Chapter Materials

Finance Unlocked For Nonprofits Guide

Start by downloading the Finance Unlocked for Nonprofits guide that includes practice activities, worksheets, and ...

Chapter: Balance Sheet – Guide

Download this chapter's guide before watching the video.

Chapter: Balance Sheet – Video Transcript

Video transcript with visual descriptions for the Finance Unlocked for Nonprofits Balance Sheet video

Sample Balance Sheet

Sample Balace Sheet from the Finance Unlocked Guide
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