Nonprofit Organization - Basic Understanding of a Statement of Functional Expenses

statement of functional expenses provides a different perspective on the nonprofit organization's financial situation, providing details not available in other reports. This shows the costs, such as salaries, rent, postage, and profit and loss, but the costs are allocated to more than one column.

When you look at the statement of functional expenses, you'll see a line list of charges on the left, then, the three columns labeled: Program, general and administrative (G & A), and fund-raising, such as the matrix. Keep in mind that this statement represents expenses only, no income.

If you want to check how much is spent to pay for programs, for example, reference to the statement of functional expenses, with an emphasis on "salary" column, line and program. Some organizations are more statements of columns, one for each program. For example, the column could have a non-profit food programs, and another column for job training, showing the costs of separate programs, instead of combining all of the costs in one column.

Donors and other stakeholders to look into this statement to confirm that costs are allocated. Usually most of the costs are shown in the program, then G & A, and at the end of the fund-raising. If the fund-raising has the highest costs, something is wrong-no-gain "alive" to fulfill the program mission, rather than fundraising. Increase funding support functions, not the main event, and too much in this area raises red flags.

the award of costs of raising funds may also raise a red flag, since very few organizations that have fund-raising costs at all. If nothing is displayed in this column, the credibility of cost allocation can be reached at pitanje.Tipično distribution programs is around 80% of total expenditure, G, and with 15%, and fund-raising from 5 %.

One of the challenges in the allocation of costs to make sure that it is reasonable. Usually, time sheets are filled with everyone in the organization, so that wages are allocated properly. The estate can be a good way to assign utilities or insurance. If the program takes up 90% of the space, then 90% of utility costs are allocated to program.Raspodjele must go outside CPA firm audits a year, so it should be reasonable and consistent.

statement of functional expenses necessary information on tax returns-990 and is an integral part of the financial statements of many non-profit.

An example of a statement of functional expenses:

ABC organization

statement of functional expenses with

6/30/20XX

[Columns] Applications / General and administrative / fund raising / total

Wages

Consultant

Legal

content

veterinary expenses

utility

Office Supplies

Total