Include in the financial statements a breakdown of expenses (e.g., salaries, travel, postage, etc.) that shows what portion of these expenses was allocated to program, fund raising, and administrative activities. If the charity has more than one major program category, the schedule should provide a breakdown for each category.
Information Needed from Charity to Determine Compliance:
The charity provides financial statements, as described in Standard 11, that include a breakdown of expenses as indicated below.
Application:
In further explanation of the requirements of this standard, the Alliance notes the following:
- The detailed functional breakdown of expenses described below is required by generally accepted accounting principles (GAAP) to be included in the audit reports for all voluntary health and welfare charities (Financial Accounting Standards Board, Statement of Financial Accounting Standards No. 117, paragraph 26). The Alliance requires that all charities, whether or not they fall under the voluntary health and welfare category, include such a schedule in their financial statements.
- An example of such a detailed breakdown of expenses is shown below. It displays the portion of natural expenses (e.g., salaries, travel, postage, etc.) incurred for each major program service, fund raising and administrative expenses.
|
|
Program Service A |
Program Service B |
|
|
|
|
|
Medical Research |
Health Education |
Fund Raising |
Adminis-trative |
Total Expenses |
|
Salaries |
60,000 |
30,000 |
47,000 |
69,000 |
206,000 |
|
Occupancy |
10,000 |
8,000 |
6,000 |
5,000 |
29,000 |
|
Grants |
210,500 |
|
|
|
210,500 |
|
Travel |
1,000 |
2,000 |
2,000 |
|
5,000 |
|
Telephone |
2,000 |
1,000 |
3,000 |
750 |
6,750 |
|
Postage |
3,000 |
2,000 |
4,500 |
1,500 |
11,000 |
|
Office Supplies |
2,500 |
500 |
500 |
750 |
4,250 |
|
Printing |
11,000 |
8,500 |
5,000 |
1,000 |
25,500 |
|
|
|
|
|
|
|
|
TOTAL |
300,000 |
52,000 |
68,000 |
78,000 |
498,000 |
- If the charity has more than one major program service activity (e.g., both medical research and health education), then the detailed functional breakdown of expenses described above should include a separate expense category for each of these programs.