When you hear the word assets, you might think of valuable things like buildings, bank accounts, or maybe even a dusty upright piano in your community center. But on your nonprofit’s balance sheet, assets aren’t just a list of “stuff you own”—they tell an important story about your financial health, sustainability, and capacity to fulfill your mission.
Let’s break down what shows up under assets, what it all means, and what you should be paying attention to.
What Are Assets, Really?
In accounting-speak, assets are resources your organization controls that have value—things you can use now or in the future to support your work. Think: cash in the bank, office furniture, prepaid rent, grants receivable, or a building you own. On the balance sheet, they’re typically grouped into two main categories:
Current Assets
These are assets that can be reasonably converted to cash within a year. This includes:
- Cash and cash equivalents: Your checking, savings, and petty cash.
- Accounts receivable: Funds owed to you—like grants or pledges you’ve been awarded but haven’t received yet.
- Prepaid expenses: Things you’ve already paid for, like annual insurance premiums.
- Short-term investments: Investments you plan to sell within the year.
These assets help your organization stay nimble—they keep the lights on and the programs running.
Non-Current Assets (or Long-Term Assets)
These support your operations over the long haul and aren’t expected to be converted to cash anytime soon. Examples include:
- Property and equipment: Buildings, land, furniture, computers—net of depreciation.
- Long-term investments: Endowments or reserve funds meant to last.
- Restricted cash: Cash reserved for a specific purpose, like a donor-restricted building fund.
What Do Healthy Assets Look Like?
A strong asset section usually includes:
- A solid cash balance that covers at least 3 months of expenses.
- Receivables that are collectable, not hanging out for 6+ months.
- Prepaid expenses that make sense (i.e., not just big mystery entries).
- Fixed assets that are being depreciated appropriately (no 10-year-old laptops still valued at $2,000).
Let’s look at two real-life examples (with names and details changed to protect the innocent!).
Example 1: Too Much of a Good Thing?
One of our clients, a small arts nonprofit, had a beautiful $150,000 endowment listed under assets—but only $2,000 in their operating bank account. Their balance sheet looked great at first glance, but their limited current assets meant they were scrambling to pay vendors and running dangerously close to missing payroll.
This is a classic example of illiquidity. While that endowment was technically an asset, it was permanently restricted and couldn’t be tapped in emergencies. We worked with the board to set up a board-designated reserve fund that could offer more flexibility going forward.
Example 2: The Case of the Vanishing Receivable
Another client, a youth services nonprofit, listed a $40,000 receivable from a government grant—dated almost 18 months ago. On paper, that boosted their assets, but in reality, the funds were never going to materialize due to a reporting issue that had never been resolved. It was a “zombie receivable”—a line item haunting the balance sheet without adding value.
We helped them write it off and implement a process to review all receivables quarterly. Cleaner books, clearer story.
What to Watch Out For
Here are a few red flags and yellow caution signs to keep an eye on:
- Old receivables – Anything over 6 months should be looked at closely.
- Negative cash – You shouldn’t see a negative cash balance, even if you’ve written checks that haven’t cleared.
- Huge swings in assets month-to-month – Unless there’s a clear reason (grant received, new building purchased), dig in.
- Outdated or missing depreciation – Depreciation should be reducing the value of equipment or buildings over time.
The Bottom Line on Nonprofit Assets
Your assets should reflect what your organization truly has available to support your mission. Regularly reviewing the balance sheet—and asking good questions about what’s in the assets section—can help you catch problems early and plan more confidently for the future.
If you’re not sure what you’re looking at, ask! We’re here to help you interpret your numbers, not just present them.
