While balance sheets are a major part of our financial lives, they do not get the recognition that they deserve. Often non-profit organizations also utilize them for tax purposes and can easily generate a more accurate picture of your organization’s financial health.
Unfortunately, most of the paperwork is handled by corporate administration and leaves much to be desired. Now you are probably wondering how a nonprofit organization can make its own statement about its financial health and that of the services it provides. In order to do this effectively, an organization needs a balance sheet template.
Many nonprofit organizations have their own reasons for using them. While they should not duplicate the style or content of the more formal financial statements, they do serve a very important purpose. In order to determine where the resources should be allocated, the nonprofit should be able to generate a balance sheet that is comprehensive. Having this in hand, it is easier to understand the direction of your organization as well as the direction it needs to go in.
While it is true that there are hundreds of free online balance sheet templates, it is also true that only a small percentage of them are accurate. There are many disadvantages to using them; however, they do present a useful tool. The drawback is that if the organization decides to use one of them, it should make sure it is a good one.
You should first of all make sure that the balance sheet template has correctly formatted information. If you look through them, you will notice that often the column headings are incorrect. This happens because in order to create them, they are simply copied and pasted from the free balance sheet templates, without any adjustments.
One of the most important factors is the list of divisions. This is necessary for doing analysis on which ones should receive more resources and which ones should be cut back. You should also check the order of the reports. You do not want to see your charity listed as a regional branch.
Of course, the font and size of the numbers are very important factor. An organization should be able to replicate the format that is used in the corporate accounting book of its peers. Often, there is no problem with this, but a certain number of charities might be too small to require any attention. You can also run a statistical test using the free online templates to check if the template you use is sufficiently complete.
Your nonprofit will stand out from the crowd if it is properly balanced. This will help the non-profit raise funds more efficiently and to reach its goals more quickly.