Philosophy: When making a contribution, donors want to know that the organization has the financial strength to pursue its mission.
Standard: The nonprofit organization:
Has a gain in unrestricted net assets at least once in the three most recently completed fiscal years;
Has a positive balance of unrestricted net assets at the end of the most recently completed fiscal year.
NOTE ON APPLICATION OF STANDARD
If a nonprofit has 3 consecutive years of unrestricted net asset deficits and/or a negative balance in unrestricted net assets at the end of the most recently completed fiscal year, the Council will take into account unrealized losses in restricted assets. Unrealized losses will be backed out of the unrestricted net asset totals.
Read the donor perspective on Financial Health