Accounting
Nonprofit Accounting
Nonprofit Management
Nonprofit Statement of Cash Flows: Direct vs Indirect Method, With a Template
Last updated: October 10, 2026 · Independent guide · We do not sell rankings or coverage.
A nonprofit statement of cash flows shows how cash, cash equivalents and restricted cash moved during the year across operating, investing and financing activities. It is the third statement in a complete set of nonprofit financial statements, alongside the statement of financial position and the statement of activities, a requirement that dates to FASB Statement 117 and now sits in ASC 958 (FASB, June 1993). A nonprofit cash flow statement follows the same ASC 230 framework as a business, with three differences you must handle: it starts from change in net assets instead of net income, it reports cash received for long-term restricted purposes as financing, and it applies a specific test to the sale of donated securities.
How to use this template
Copy the table below into your workbook and replace the illustrative amounts with your own. The third column tells you which ledger balance or schedule each line comes from, so you can build formulas that pull the year-over-year change from your trial balance. Keep the line order, delete lines that do not apply to you, and confirm that the ending cash figure agrees with the cash, cash equivalents and restricted cash on your statement of financial position before you hand the draft to your auditor.
Nonprofit statement of cash flows template (indirect method)
All amounts below are an illustration for a fictional organization with a June 30, 2026 year end. They are not drawn from any real entity.
| Line item | Illustrative FY2026 (USD) | Where the number comes from |
|---|---|---|
| Cash flows from operating activities | ||
| Change in net assets | 1,250,000 | Total column of the statement of activities (both net asset classes) |
| Adjustments to reconcile change in net assets to net cash from operating activities: | ||
| Depreciation and amortization | 180,000 | Depreciation expense accounts or fixed asset roll-forward |
| Net realized and unrealized (gains) losses on investments | (210,000) | Investment roll-forward or custodian statements |
| Loss on disposal of equipment | 5,000 | Gain or loss on disposal account |
| Contributed securities held at year end or not sold nearly immediately | (40,000) | Gift processing log of stock gifts, with receipt and sale dates |
| Contributions restricted for long-term purposes | (600,000) | Capital campaign and endowment contribution revenue, cash and pledges |
| Changes in operating assets and liabilities: | ||
| (Increase) decrease in contributions receivable, excluding long-term restricted pledges | (150,000) | Pledge receivable roll-forward, net of discount and allowance |
| (Increase) decrease in grants receivable | 40,000 | Grants receivable control account |
| (Increase) decrease in prepaid expenses | (10,000) | Prepaid account |
| Increase (decrease) in accounts payable and accrued expenses | 35,000 | AP and accrual accounts, excluding capital purchases still unpaid |
| Increase (decrease) in refundable advances | 120,000 | Refundable advance liability for conditional grants paid in advance |
| Increase (decrease) in deferred revenue | (25,000) | Exchange transactions billed in advance, such as tuition or event fees |
| Net cash provided by operating activities | 595,000 | Subtotal |
| Cash flows from investing activities | ||
| Purchases of property and equipment | (700,000) | Fixed asset additions paid in cash during the year |
| Purchases of investments | (900,000) | Investment roll-forward |
| Proceeds from sales of investments | 650,000 | Investment roll-forward |
| Proceeds from sale of donated securities not converted nearly immediately | 40,000 | Gift processing log and brokerage statements |
| Net cash used in investing activities | (910,000) | Subtotal |
| Cash flows from financing activities | ||
| Proceeds from contributions restricted for long-term purposes (capital and endowment) | 550,000 | Cash gifts plus pledge collections coded to capital or endowment funds |
| Proceeds from sale of donated securities restricted for long-term purposes | 50,000 | Gift processing log, restricted and sold nearly immediately |
| Principal payments on long-term debt | (60,000) | Debt amortization schedule |
| Net cash provided by financing activities | 540,000 | Subtotal |
| Net change in cash, cash equivalents and restricted cash | 225,000 | Operating + investing + financing |
| Cash, cash equivalents and restricted cash, beginning of year | 1,845,000 | Prior-year audited balance |
| Cash, cash equivalents and restricted cash, end of year | 2,070,000 | Must agree to the statement of financial position |
| Reconciliation to the statement of financial position | ||
| Cash and cash equivalents | 1,610,000 | Operating and money market accounts |
| Cash restricted for building project | 460,000 | Separately held capital campaign account |
| Supplemental disclosures | ||
| Cash paid for interest | 18,000 | Interest expense, adjusted for accrued interest |
| Noncash: securities received as contributions | 90,000 | Gift processing log |
| Noncash: property and equipment purchases included in accounts payable | 30,000 | Year-end AP listing |
Direct-method operating section (alternative)
If you choose the direct method, replace the operating section above with gross receipts and payments. Investing, financing and the supplemental disclosures stay the same. The illustrative figures below produce the same 595,000 of operating cash.
| Operating line (direct method) | Illustrative FY2026 (USD) | Where the number comes from |
|---|---|---|
| Contributions and grants received (excluding long-term restricted) | 3,420,000 | Cash receipts coded to contribution and grant revenue |
| Program service fees received | 610,000 | AR receipts and point-of-sale deposits |
| Interest and dividends received | 85,000 | Custodian statements |
| Cash paid to employees and for benefits | (2,560,000) | Payroll register and benefit invoices |
| Cash paid to suppliers and vendors | (942,000) | AP check and ACH register, excluding capital purchases |
| Interest paid | (18,000) | Loan statements |
| Net cash provided by operating activities | 595,000 | Must equal the indirect-method subtotal |
How to fill in each part of the template
Start from change in net assets
FASB Statement 117 amended the cash flow standard so that every reference to net income in the reconciliation also covers “change in net assets of a not-for-profit organization” (FASB, June 1993). Use the total change in net assets for both classes combined, not only the without-donor-restrictions column. Releases from restriction move amounts between classes and net to zero, so they never appear as a reconciling item.
Contributions restricted for long-term purposes
Cash received from contributions and investment income that donors restrict to acquiring, constructing or improving property, or to establishing or increasing a permanent or term endowment, is a financing inflow (FASB, June 1993). That revenue is already inside change in net assets, so the indirect method removes it from operating activities and the cash collected appears under financing (Withum, January 4, 2018). PwC’s not-for-profit guide shows the same pattern, with “Proceeds from contributions restricted for long-term purposes” as a financing line and an offsetting deduction in the operating reconciliation (PwC Viewpoint, no date shown). Purpose restrictions for programs are not long-term purposes and stay in operating activities.
Pledge receivable changes
Split your pledge roll-forward into operating pledges and long-term restricted pledges before you calculate the change. The operating change goes in the receivables line. The long-term restricted portion is already removed through the contributions line above, and its collections during the year are included in the financing proceeds. If you subtract the full receivable change in operating and also deduct the long-term contributions, you count the same pledge twice. A pledge system that tags each commitment by fund makes this split much faster; our guide to pledge management software covers how those tools feed the ledger.
Refundable advances
Under ASU 2018-08, cash received on a conditional grant before the barrier is overcome is recorded as a refundable advance, which is a liability, until the conditions have been substantially met (BLS, no date shown). Revenue is recognized on the date the condition is met rather than the grant date (Baker Tilly, November 12, 2019). The cash is real but the revenue is not yet in change in net assets, so the increase in the liability is added back in operating activities. When the condition is met in a later year, revenue rises and the liability falls, and the decrease reverses the add-back.
Donated securities
ASU 2012-05 sets a three-part test for cash from selling donated financial assets (Withum, January 15, 2015). Withum notes that “nearly immediately” should generally mean within days rather than months.
| Facts about the gift | Classification of sale proceeds | Template line |
|---|---|---|
| No limits on sale, sold nearly immediately, no long-term restriction | Operating | No adjustment needed; revenue and cash offset |
| No limits on sale, sold nearly immediately, restricted for a long-term purpose | Financing | Proceeds from sale of donated securities restricted for long-term purposes |
| Not sold nearly immediately, or the donor limited the sale | Investing | Deduct the noncash gift in operating; show proceeds under investing |
Restricted cash and supplemental disclosures
Since ASU 2016-18 took effect for nonpublic entities in years beginning after December 15, 2018, restricted cash is included in the beginning and ending totals, and you reconcile those totals to the statement of financial position (Withum, January 4, 2018). Noncash investing and financing activities, such as gifts of buildings, securities or beneficial interests, are disclosed on the face of the statement or in the notes rather than in a section. FASB Statement 117 specifically added “obtaining a building or investment asset by receiving a gift” to the list of noncash examples (FASB, June 1993).
Direct vs indirect method after ASU 2016-14
FASB issued ASU 2016-14 on August 18, 2016, effective for fiscal years beginning after December 15, 2017. It kept the choice between the two methods but removed the requirement to present or disclose the indirect-method reconciliation when you use the direct method (Deloitte, September 12, 2016). Before the update, direct-method preparers had to produce both presentations. You may still present the reconciliation voluntarily (BLS, no date shown).
| Factor | Indirect method | Direct method |
|---|---|---|
| Data you need | Trial balances for two year ends plus a few roll-forwards | Cash receipts and disbursements coded by type |
| Reconciliation from change in net assets | Is the operating section | Optional since ASU 2016-14 |
| Readability for board and donors | Harder; adjustments confuse non-accountants | Easier; shows cash from donors and paid to staff |
Choose direct if your bank and AP transactions already carry revenue and expense coding you trust, or if your board asks where cash came from. Choose indirect if you prepare the statement once a year from two trial balances and a few roll-forwards.
Common mistakes
- Reporting all restricted gifts as financing. Only long-term purposes (capital and endowment) qualify; program-restricted cash is operating.
- Double counting long-term pledges by deducting them in both the contributions line and the receivables change.
- Leaving unrealized gains in operating cash. Gains are noncash and must be removed; the cash appears only when securities are sold.
- Treating every stock gift as operating without checking how long the organization held it.
- Showing capital purchases still in accounts payable as investing outflows. Exclude them from AP changes and disclose them as noncash.
- Ending cash that excludes restricted cash, so the statement does not agree with the balance sheet.
Running it in software: Sage Intacct, Financial Edge NXT and QuickBooks Online
Sage Intacct. You build the statement in the financial report writer from account groups, which you create at Reports > Setup > Account groups (Sage Intacct, last modified October 8, 2026). Intacct says an account must be in an account group to appear on a statement of cash flows (Sage Intacct, last modified September 25, 2026). Intacct recommends End of Period for balance sheet groups, but its “For period” calculation method calculates only the amounts in the period you select (Sage Intacct, last modified October 8, 2026), so a balance sheet group set to For period shows the activity for the period, which is the change the indirect method needs. Separate groups for long-term restricted contribution accounts and pledges let you produce the financing line directly. Velixo, which sells an Excel add-in for Intacct, publishes nonprofit cash flow templates in direct and indirect versions (Velixo, July 22, 2025). See our Sage Intacct for nonprofits review for module and pricing detail.
Blackbaud Financial Edge NXT. Go to Reports, select Add, and choose Statement of Cash Flows as the type. Each balance sheet account carries a cash flow code that determines where it appears on the report, and output goes to PDF, Excel or Word (Blackbaud, no date shown, checked October 10, 2026). Review the codes on pledge, refundable advance and restricted cash accounts before year end, because a wrong code moves the amount silently. Blackbaud’s help page does not say whether the report uses the direct or indirect method, so confirm the layout against your auditor’s prior-year statement.
QuickBooks Online. Open Reports, choose Standard reports and search for Statement of Cash Flows. Intuit says the report runs on the accrual basis only (Intuit, updated August 5, 2026). Intuit’s help article does not mention any way to change where accounts appear on the report, and a QuickBooks community moderator wrote in January 2023 that the option to reclassify accounts on the Statement of Cash Flows is unavailable for online versions of QuickBooks (QuickBooks Community, January 24, 2023). If you need a long-term restricted contributions financing line or the donated securities split, plan to export the trial balance and finish the statement in this template. When that rework grows every year, compare options in our guides to QuickBooks alternatives for nonprofits and nonprofit accounting software.
How we researched this
We read the original FASB Statement 117 text, the Deloitte summary of ASU 2016-14, PwC’s not-for-profit guide and CPA firm explanations of ASU 2012-05, ASU 2016-18 and ASU 2018-08. We reviewed the vendor help pages for Sage Intacct, Blackbaud Financial Edge NXT and QuickBooks Online on October 10, 2026, and the top-ranking articles for this search term. No vendor paid for or reviewed this article. All dollar amounts in the template are illustrative.
Related guides
- Statement of Activities: Nonprofit Template and How-To
- 13-Week Cash Flow Forecast: How to Build One (Template)
- Cash Reconciliation: Month-End Process for Every Account
Frequently asked questions
Is a statement of cash flows required for nonprofits?
Yes, for nonprofits that follow US GAAP. A complete set of nonprofit financial statements includes a statement of financial position, a statement of activities, a statement of cash flows and notes. This requirement dates to FASB Statement 117 and now sits in ASC 958.
Do restricted donations go in financing activities?
Only those restricted for long-term purposes, meaning buying, building or improving long-lived assets, or creating or adding to a permanent or term endowment. Gifts restricted to a program or a time period are operating cash flows. Investment income that donors restrict for those same long-term purposes is also financing.
Where do donated stocks go on the cash flow statement?
The receipt of the stock is a noncash transaction that you disclose. The cash from selling it is operating if you sold it nearly immediately and the donor did not restrict it long term, financing if it was restricted for a long-term purpose, and investing if you held it or the donor limited the sale.
Which method should a small nonprofit use?
The indirect method is usually simpler for a small finance team because it can be prepared from two year-end trial balances. The direct method is easier for a board to read and, since ASU 2016-14, no longer requires a separate reconciliation. Pick the method your systems can support without manual recoding.
Sources
- FASB, Statement of Financial Accounting Standards No. 117, Financial Statements of Not-for-Profit Organizations, June 1993. storage.fasb.org
- Deloitte, Heads Up: FASB Overhauls Guidance on Presentation of Financial Statements for Not-for-Profit Entities, September 12, 2016. dart.deloitte.com
- PwC Viewpoint, Not-for-profit entities guide, cash flow presentation, no date shown. viewpoint.pwc.com
- Withum (CPA firm), Statement of Cash Flows for Not-for-Profit Entities, January 4, 2018. withum.com
- Withum (CPA firm), Sale of Donated Financial Assets, January 15, 2015. withum.com
- BLS (CPA firm), ASU 2016-14: Presentation of Operating Cash Flows, no date shown. belfint.com
- BLS (CPA firm), Accounting for Grants and Contributions (ASU 2018-08), Part 2, no date shown. belfint.com
- Baker Tilly (CPA and advisory firm), How ASU 2018-08 affects not-for-profit accounting, November 12, 2019. bakertilly.com
- Sage Intacct, Add an account group, last modified October 8, 2026. intacct.com
- Sage Intacct, Introduction to account groups, last modified September 25, 2026. intacct.com
- Velixo (sells an Excel reporting add-in), SI-GL-RT4.NFP Statement of Cash Flows, July 22, 2025. velixo.com
- Blackbaud, Financial Edge NXT help: Statement of Cash Flows, no date shown, checked October 10, 2026. blackbaud.com
- Intuit, How to run a Statement of Cash Flows, updated August 5, 2026. quickbooks.intuit.com
- QuickBooks Community, Statement of Cash Flows: Classification (moderator reply), January 24, 2023. quickbooks.intuit.com
Sherman Hsieh
Independent analysis of enterprise software — ERP, CRM and more
