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STATEMENT OF FUNCTIONAL EXPENSE INSTRUCTIONS All organizations who complete the IRS Form 990 N (post card), 990-EZ, 990-PF or who do not complete any Form 990 must complete the Statement of Functional

How to fill out statement of functional expenses

How to fill out statement of functional expenses:

1. Gather all relevant financial information for the reporting period, including income and expenses.
2. Identify the different functions or program areas of your organization, such as fundraising, administration, or direct services.
3. Allocate your expenses to these program areas based on their direct or indirect relation to each function.
4. Calculate the total expenses for each program area.
5. Determine the percentage of total expenses that each program area represents.
6. Prepare the statement of functional expenses using the required format, which typically includes columns for program areas and their respective expenses.
7. Clearly label and provide appropriate descriptions for each program area and expense category.
8. Ensure that the statement accurately reflects the financial activity of your organization during the reporting period.
9. Review and verify the statement for accuracy and completeness.
10. Keep a copy of the statement for internal recordkeeping purposes and for any potential audits or reviews.

Who needs a statement of functional expenses:

1. Nonprofit organizations: Nonprofit organizations are often required by regulatory bodies, such as the Internal Revenue Service (IRS), to provide a statement of functional expenses as part of their financial reporting obligations.
2. Potential donors or funders: Donors and funders may request a statement of functional expenses to better understand how their contributions will be allocated and used by the organization.
3. Internal stakeholders: Board members, executive directors, and other internal stakeholders may use the statement of functional expenses to monitor and evaluate the financial performance and efficiency of the organization's different program areas.
4. Government agencies: Government agencies that provide grants or funding to nonprofit organizations often require a statement of functional expenses to ensure compliance with funding requirements and to assess the organization's financial management practices.

For pdfFiller’s FAQs

What is statement of functional expenses?

The statement of functional expenses is a financial statement that reports the costs associated with the functions and activities of a non-profit organization.

Who is required to file statement of functional expenses?

Non-profit organizations are required to file a statement of functional expenses as part of their financial reporting.

How to fill out statement of functional expenses?

The statement of functional expenses can be filled out by categorizing expenses by function (such as program services, management and general, and fundraising) and allocating expenses accordingly.

What is the purpose of statement of functional expenses?

The purpose of the statement of functional expenses is to provide transparency and clarity on how a non-profit organization allocates its expenses to various functions.

What information must be reported on statement of functional expenses?

The statement of functional expenses must include a breakdown of expenses by function, as well as any supporting documentation.

How do I make changes in statement of functional expenses?

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