Nonprofit Search Resources: Understanding the Profit and Loss Statement
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Profit and loss. P&L. Income statement. Statement of Activities. Statement of Revenue and Expenses. These are all names for the same thing – a statement that summarizes the income and expenses for a set time period, usually a year. For this article, let’s use the term profit and loss statement. For nonprofit organizations, a profit and loss statement is intended to show how much the organization spent to accomplish its mission and how those activities were funded.
Profit and Loss Statement: the Basics
Let’s first focus on the time period. Different from the balance sheet, which shows the value of items on one day, the profit and loss statement is for a set time period. When preparing your 990, the profit and loss statement covers your entire fiscal year. It is your chance to show how you spent money on your mission (expenses) and where you got that money from (revenue).
The first section on the profit and loss statement shows your organization’s revenue. It lists contributions (donations), earned revenue (service is provided in exchange for the revenue), investment earnings, special events and other revenue sources.
The second section lists the organization’s expenses. It shows the amount spent on achieving the organization’s mission. On the 990, expenses have to be categorized based on whether the expense was incurred for a program service, management and general, or fundraising purposes.
The bottom-line number on a profit and loss statement shows the change in net assets. In a for-profit company, that number is also called net income. For nonprofit organizations, it shows if you spent more money than you brought in for the time period.
As with all financial statements, the profit and loss statement is a starting point to a conversation about the organization’s accomplishments.
Profit and Loss Statements and Your Nonprofit Search Profile
Nonprofit Search only requires a profit and loss statement if your organization submits a postcard, which is also called the Form 990N (990EZ has its own P&L on it), to the IRS. These are organizations with a revenue under $50,000 or organizations that are part of a larger organization (such as a chapter) and share a Form 990. This is so that we can break their financials out from the larger organization.
It is very important to submit this document when setting up your organization’s profile. Your profile will be considered incomplete and will not be publicly viewable until this document is submitted.
Setting Up Your Nonprofit Search Profile
Setting up your profile is simple! To start, reach out to our team at NPS@cffound.org with the following information:
- Your name, title, and organization’s name
- Your preferred login email address
- Your organization’s EIN #
If you have a profile but need help, please reach out to us at NPS@cffound.org with your question. We are also available by phone at 407-872-3050, Monday through Friday, 9AM-5PM. Additionally, you can fill out the form below to each Susan Ponce for Nonprofit Search help.
