The Numbers That Tell Your Story: Your Mission’s Progress Report
How funders read your Statement of Activities and what they’re looking for
This is the 2nd edition in a series of newsletters highlighting my takeaways from the “Ask Me Anything: What Funders Look for in Financial Statements” session hosted by @Candid.
If the balance sheet is a snapshot, the Statement of Activities is the movie. It covers a period of time and shows funders whether your organization is moving in the right direction.
Most people call it the Income Statement or P&L. For nonprofits, it’s also a scorecard — and funders know how to read it.
The 4 Things Funders Are Scanning For
1️ Net asset position: Are you ending the year with more than you started with? A one-time deficit isn’t alarming. A pattern of deficits over two or three years is.
2️ Revenue diversity: Is your income spread across multiple sources — grants, government contracts, individual donors, earned income? Or does one source represent 40%+ of your budget?
3️ Restriction management: Are donor-restricted funds being drawn down appropriately? Are new restrictions being added thoughtfully?
4️ Expense trends: Are costs rising in proportion to program delivery — or is something unusual happening that needs explaining?
The Trend Is the Story
One year of data is a fact. Three years of data is a trend. Trends are what funders use to predict your future.
So ask yourself: What does my three-year trend look like?
• Revenue growing? That signals momentum.
• Expenses well-managed? That signals discipline.
• Net position declining two years in a row? That needs a narrative — immediately.
| 💡 Reframe: When a negative trend exists, naming it first and explaining your plan is almost always more powerful than hoping a funder overlooks it. Transparency is a fundraising strategy. |
Revenue Diversity = Resilience Messaging
Here’s a mindset shift worth making: revenue diversity isn’t just a financial goal. It’s a marketing message.
How so?
When a funder sees that your organization is supported by a healthy mix of income sources, they hear:
| ✨ “Our mission doesn’t depend on any single check clearing.” |
If your revenue isn’t yet diversified that’s not automatically disqualifying. But it requires a proactive narrative. Acknowledge the concentration, explain what drove it, and describe the specific steps you’re taking to broaden your base.
| ✅ DO THIS TODAY– Map your revenue sources as percentages of total revenue for the last 3 years.- If any single source is above 40%, write 2 sentences about your diversification strategy.- Drop that language into your next grant narrative before the funder has to ask. |
| Up Next → Week 3: The Audit — Your Financial Credibility Card |