Other Changes in Net Assets

In most cases, the difference between the beginning and ending net assets for the year is the amount of income that exceeds the organization’s expenses.

Sometimes a charity’s financial statements will record other changes in net assets that are not the result of the difference between income and expenses.  This is called an “other change in net assets.”  It is also sometimes called a “capital addition.”

An example of such an “other change in net assets” for an international relief organization would be an adjustment to account for the revaluation of foreign currency. Another example would be if a charity had a source of revenue that was subject to federal income tax, the income tax expense could be reported as an “other change in net assets.”