Costs that cannot be directly related to a specific program or specific supporting activity are referred to as “indirect” costs. The examples provided above are usually components in a methodology, generally referred to as an “indirect cost allocation plan,” that attempts to assign each program or supporting activity with a reasonable allocation of indirect costs. When these ...

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Support to affiliated organizations. Some organizations make payments or provide other support to local or national affiliates. These payments should be reported by their functional classification to the extent that it is practicable and reasonable to do so and the necessary information is available, even if it is impossible to allocate the entire amount of the payments to functions. (NFP Audit Guide) ...

The more typical not-for-profit organization, however, has several separate and identifiable services, and in such cases the expenses for program services should be reported by the kind of service function or group of functions. (NFP Audit Guide) ...

To help donors, creditors, and others in assessing an organization’s service efforts, including the costs of its services and how it uses resources, a statement of activities or notes to financial statements should provide information about expenses reported by their functional classification, such as major classes of program services and supporting activities. (SFAS 117) ...