Not-for-Profit Language

Alternative Names for Financial Statements

CCA knows that not-for-profits are fundamentally different to businesses (see here for more info). We think that terms like financial or service ‘performance’ or ‘deficit’ poorly express what financial information is meant to tell those reading them in a not-for-profit situation.

Accounting standards allow organisations to choose their own titles for statements, headers or categories. CCA makes use of this provision like this:

‘Official’ Name Not-for-profit name used by CCA Reason
Statement of Financial Performance Statement of Funding ‘Financial Performance’ refers to a business’s efficiency in generating revenue and is an inappropriate description of the financial activity occurring in a not-for-profit. For a not-for-profit this statement is meant to show how the organisation has spent the funds available to them, and how this expenditure was funded.
Income/RevenueExpenditure Funds ReceivedFunds Applied To avoid connotations such as income=good; expenditure=bad. These sections are about how money has been spent, not what costs have been incurred to make money.
Profit/Loss or Surplus/Deficit Reserves Accumulated/ Applied There is no ‘surplus’ or ‘deficit’ in a not-for-profit: money can only be saved for future use, or such savings be applied in the reporting year. Applying more funds than have been received in a given year is not necessarily a sign of inefficient operation, but may be the organisation’s choice to apply some of their reserves.
Statement of Service Performance Statement of Service Activity To avoid the connotations inherent in the word ‘performance’.
Statement of Financial Position Statement of Reserves To clarify that the difference between assets and liabilities is not owned by anyone but comprises reserves for future use.
Equity/Accumulated Funds/ Members Funds/ Trustees Funds or similar. Reserves As above.
Performance Report Financial and Service Statements To avoid the connotations inherent in the word ‘performance’.