08/14/2026
On this National Financial Awareness Day, we asked one of our Vice Presidents of Finance, Sam Stroup, for his thoughts on nonprofit financial management and best practices:
A lot of people ask me about the main difference between an Income Statement and a Balance Sheet, and when to focus on each one.
My favorite way to explain it: think of the Income Statement like your vital signs and bloodwork when at a doctor’s appointment. When talking to your doctor, you will spend most of the time going over your blood pressure, weight, cholesterol, A1C, etc - same as how your monthly board meetings will focus mostly on the Income Statement and how you're tracking to budget. These vital signs are all indicators of how your health is trending, but a few off-track numbers do not mean you're about to kick the bucket.
The Balance Sheet, and specifically the Net Assets, is like your body and organs. Over time, if your vital signs keep trending in the wrong direction (say, high blood pressure for a sustained period), your organs can become permanently damaged. It is the same with the Balance Sheet – a few bad months, quarters, or years of Income Statement performance can lead to an eroding Balance Sheet, putting your organization at financial risk.
So, it is worth regularly checking in on your Balance Sheet (specifically the Net Assets) to see how it is trending over time to ensure the ORGANization stays healthy!
Disclaimer: I am definitely NOT a doctor, but I am a CPA, and always happy to help diagnose your organization’s health!
