Reporting Expenses for Non-Profit Organizations

Generally accepted accounting principles (GAAP) require non-profits to report expenses on a functional basis. What this means is that expenses must be broken out into categories of program services and supporting activities. Supporting activities generally includes administrative expenses, fund raising expenses and membership services.
Program services are those activities which help fulfill the purpose or mission of the non-profit. These services generally include salaries, rent, supplies, etc., basically anything that is used directly in one of the programs relating to the mission. It should be noted that some things, like rent, might have to be allocated between different functional categories if it is not completely identifiable to just one of the categories.

Support services include general and administrative, fundraising and membership services. Administrative expenses are those expenses that do not relate directly to a program, but are not considered fund raising or membership services. These expenses may include management salaries, budgeting, record keeping, etc. Fund raising expenses are the expenses incurred while eliciting funds for the organization. They can include fund raising campaigns, special fund raising events, maintaining donor lists, etc. Membership services include costs incurred for maintaining membership records and providing benefits to the organization’s members. This includes soliciting for prospective members and membership dues, membership relations, and similar activities. Read the rest of this entry »