Nonprofit Financial Statements: How to Read and Analyze Them

If you are interested in gaining the necessary accounting knowledge to comprehend nonprofit financial statements, then this course is tailored specifically for you. Throughout this comprehensive program, you will not only grasp the fundamental accounting principles through the preparation of financial statements but also learn to interpret existing financial statements, equipping you with the essential understanding of fundamental terms and concepts. This will enable you to assess a nonprofit's financial standing with confidence and accuracy.

By the conclusion of this course, you will possess the ability to analyze a nonprofit's financial statements, evaluate its expenditure patterns, and assess its financial stability. These skills will prove invaluable in the nonprofit sector, where financial literacy is crucial for making informed decisions and ensuring the organization's long-term success.

Course Content

Comprehending the Composition and Purpose of Financial Statements

The course content is designed to provide a thorough understanding of nonprofit accounting fundamentals and financial statements. It covers a range of topics, including the basic characteristics of financial statements, the composition and purpose of financial statements, and the importance of IRS Form 990, a mandatory filing for nonprofits. Through in-depth examinations of prominent nonprofit organizations such as the Bill and Melinda Gates Foundation and the American Red Cross, you will gain valuable insights into real-world financial statements and their implications.

Application of Knowledge through a Case Study on the Wikimedia Foundation

One of the highlights of this course is the application of knowledge through a comprehensive case study centered on the Wikimedia Foundation. This case study will test your comprehension and analytical skills through a series of 30 thought-provoking questions. By delving into the financial statements of the Wikimedia Foundation, you will learn to apply your knowledge in a practical and meaningful way.

Utilizing Ratio Analysis to Evaluate Nonprofits

Furthermore, this course will equip you with the tools to evaluate nonprofits using financial information analysis. You will learn to assess nonprofits using three categories of ratios, providing you with a comprehensive framework for evaluating their financial health and performance.

Upon completion of this course, you will have developed the skills to interpret and analyze nonprofit financial statements with confidence and precision. This newfound financial literacy will not only enhance your professional capabilities but also contribute to the overall success and sustainability of nonprofit organizations.

So, join me on this educational journey and unlock the real-world context of nonprofit accounting and financial literacy.

Anybody interested in understanding how a nonprofit is doing financially.

1. Explain how the balance sheet, statement of activities, and statement of cash flows are used, what they measure, and why we need three statements. 
2. Differentiate between activities and cash flow
3. Explain what is the balance sheet equation and why the balance sheet equation is the foundational model for accrual accounting/double entry accounting
4. Define what are assets, liabilities, and net assets and how assets, liabilities, and net assets relate
5. Explain how the statement of cash flows and statement of activities link into the balance sheet
6. Explain the difference between for-profit and nonprofit financial statements
7. Locate a real nonprofit’s annual report at their website and locate their financial statements within the annual report
8. Explain who are the four most important stakeholders of a nonprofit (donors, employees, society, vendors)
9. Explain the give and take of a transaction and how to record both sides of the transaction separately with the four stakeholders
10. Explain what each line item of the balance sheet means for Bill & Melinda Gates Foundation, American Red Cross, and Wikimedia Foundation and distinguish between current assets, non-current assets, current liabilities, non-current liabilities, and net assets with and without donor restrictions
11. Explain which side of the give and take appears on the statement of activities and on the statement of cash flows
12. Explain why you can’t measure activities with cash and why you need to use accrual accounting (double-entry accounting), not cash accounting
13. Illustrate how accrual accounting can both record cash and activities using a spreadsheet
14. Explain what each line item of the statement of activities means for Bill & Melinda Gates Foundation, American Red Cross, and Wikimedia Foundation, including contributions/revenues and expenses with and without donor restrictions
15. Explain each important line item for the three sections of the statement of cash flows: operating activities, investing activities, and financing activities for Bill & Melinda Gates Foundation, American Red Cross, and Wikimedia Foundation
16. Explain how the format of the operating activities section differs from the other two activities (investing and financing)
17. Show how 11 common transactions with stakeholders affect the balance sheet, statement of activities, and statement of cash flows
18. Explain how to find and read IRS Form 990 for nonprofits
19. Explain how to analyze liquidity, operating, and spending ratios for nonprofits
20. Test your knowledge by completing 30 multiple-choice question case about the Wikimedia Foundation

1. No course requirements or prerequisites
2. This course is for those with little financial knowledge