How Nonprofit Administrative Expenses Affect Funding:
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Nonprofit organizations are subject to a unique accounting and reporting requirement that requires the reporting of expenses according to the purpose for which they are incurred. This process, referred to as functional expense allocation, is one of the more challenging areas of preparing a nonprofit’s financial statements. Expenses for nonprofits are grouped in functional categories as either program, or supporting service expenses. There are two categories of supporting service expenses management and general or administrative and fund raising.
Administrative expenses are the expenses incurred for the overall operations and management of your organization. Paying certain employees’ salaries, payroll taxes and fringe benefits, rent for your offices, utilities, legal expenses, audit fees and office supplies are all examples of the administrative costs that you incur in the process of remaining an ongoing concern.
Your administrative expenses are a necessary investment in your infrastructure and operations and are essential for your organization to be more sustainable to be able to fulfill your mission.
FastFund Online is a true nonprofit accounting system that will help your organization generate financial statements segregating all of your activity into the functional areas necessary for proper nonprofit reporting.
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