Functional Expense Allocation for Nonprofits

Functional expense allocation can be challenging for nonprofits. Expenses must be divided among various functions, according to the purpose for which the costs are incurred.

• What are the differences between the types of functional expense classifications — program services, supporting services, management and general expenses, and expenses incurred for fundraising?
• Which expense allocation method should be used — direct or indirect?
• Does expense allocation change for a federal grant?

Yeo & Yeo is pleased to offer a whitepaper, Functional Expense Allocation for Nonprofits, that explains functional classifications and other issues to consider in allocating expenses for your organization.

Beyond meeting compliance requirements, there are very good reasons to care about the functional classification of expenses, as they help tell the story of a nonprofit. If you have a question, reach out Yeo & Yeo’s Non-Profit experienced professionals.