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Statement of Functional Expenses Instructions Utah State Law requires a Statement of Functional Expenses to be submitted by organizations that file an IRS Form 990EZ, 990 N, 990PF, or do not complete

How to fill out statement of functional expenses

How to fill out statement of functional expenses:

1. Gather all relevant financial information: Collect all expense data for your organization, including salaries, rent, utilities, supplies, and any other expenses incurred in the course of your operations.
2. Categorize expenses by function: Divide your expenses into functional categories such as program expenses, management and general expenses, and fundraising expenses. This will help you determine the purpose of each expense and allocate it correctly.
3. Allocate expenses: Assign each expense to the appropriate functional category based on its purpose. For example, if an expense directly benefits a program, it should be categorized under program expenses.
4. Calculate percentages: Calculate the percentage of each functional category in relation to the total expenses. This will help you understand the distribution of expenses across different functions.
5. Prepare the statement: Create a statement of functional expenses using the information gathered and organized. This statement should clearly present the breakdown of expenses by functional category and their corresponding percentages.
6. Review and validate: Double-check your calculations and ensure the accuracy of the information presented in the statement. It is crucial to have accurate data to provide transparency and accountability.

Who needs statement of functional expenses:

1. Nonprofit organizations: Nonprofits are often required by law to provide a statement of functional expenses as part of their financial reporting. This helps donors, grantors, and government agencies understand how the organization spends its funds.
2. Grantors and donors: Individuals and organizations providing grants or donations to nonprofits may request a statement of functional expenses to ensure their contributions are being used for the intended purpose.
3. Regulatory bodies: Government agencies and regulatory bodies may require nonprofits to submit a statement of functional expenses as part of their reporting obligations. This helps ensure compliance with regulations and transparency in the usage of funds.
4. Internal stakeholders: Board members, management, and staff of nonprofits may use the statement of functional expenses to gain insights into the organization's financial operations, identify areas for improvement, and make informed decisions regarding resource allocation.

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What is statement of functional expenses?

The statement of functional expenses is a financial statement that reports how a nonprofit organization's expenses are allocated to the different functional areas of the organization.

Who is required to file statement of functional expenses?

Nonprofit organizations are required to file a statement of functional expenses as part of their annual financial reporting.

How to fill out statement of functional expenses?

To fill out a statement of functional expenses, the organization must categorize expenses by function (such as program services, management and general, and fundraising) and allocate expenses accordingly.

What is the purpose of statement of functional expenses?

The purpose of the statement of functional expenses is to provide transparency and accountability regarding how a nonprofit organization's resources are used to support its mission.

What information must be reported on statement of functional expenses?

The statement of functional expenses must report total expenses broken down by function, along with any supporting details or notes to explain the allocations.