Net Assets and Liabilities: Statement of Financial Position

The presentation of assets and liabilities is the same for both for-profit and nonprofit businesses, except for the balance sheet. For-profit businesses show owner’s equity, which is made up of retained earnings and stock. Nonprofits do not have owners, therefore, there is no owner’ equity. The difference between the total assets and total liabilities is called net assets. This is presented in the Statement of Financial Position.

Net assets in nonprofit accounting are what your organization has, what is owed, what is invested and what is deposited. Liabilities are what your organization owes to others or holds on behalf of others.

The calculation of retained earnings and net assets is essentially the same. It is the cumulative difference between revenue and expenses. For nonprofits, revenue must be assigned as either net assets without donor restrictions, or net assets with donor restrictions.

Net assets represent the net worth of the organization and can be either fixed, liquid (cash), long term, tangible and intangible.

https://www.araize.com/nonprofit-accounting-net-assets/

How Are NGOs Funded?

As nonprofit organizations, NGOs rely on a variety of sources for funding projects, operations, salaries, and other overhead costs. Because the annual budget of an NGO can be in the hundreds of millions (or even billions) of dollars, fundraising efforts are important for the NGO’s existence and success. Funding sources include membership dues; the sale of goods and services; private sector, for-profit companies; philanthropic foundations; grants from local, state, and federal agencies, as well as foreign governments; and private donations.41

Individual private donors can comprise a significant portion of NGO funding. Some of these donations come from wealthy individuals, such as Ted Turner’s $1 billion donation to the United Nations.5 Another example, as reported by CNBC, would be Warren Buffett’s 2006 pledge to give 10 million Berkshire Hathaway Class B shares to the Bill & Melinda Gates Foundation (valued at more than $31 billion in June 2006). As of the end of 2021, Buffett had donated a total of $32.7 billion to the Gates Foundation.6 However, NGOs also can rely on a large number of small donations rather than a small number of large donations.

Despite their independence from government, a number of NGOs rely heavily on government funding to function. Some government NGO funding may be viewed as controversial, because the funding may dampen an NGO’s ability to advocate politically or attempt to achieve radical goals.7

https://www.investopedia.com/ask/answers/13/ngos-get-funding...