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You are here: Home / Archives for Casey Crowell

What are Functional Expenses and Why Do They Matter to Nonprofits?

April 6, 2021 by Casey Crowell

By: Susan Rosati                               

The IRS requires nonprofits to divide their expenses into three categories that include program, management and general, and fundraising for filing the 990 tax return. Essentially, functional expenses describe the purpose of any expense. This is different as compared to natural expenses, which are based on the type of payment such as supplies or insurance.

Program expenses are the expenses needed to run the core mission of the nonprofit and are usually the biggest group. These are the costs that are delivered through programs or services. They also include direct or indirect program expenses. Direct expense are tied directly to the program, such as staff who deliver your services. Indirect expenses, such as utilities or billing services, are often allocated because they do not tie to any one particular program. Traditionally, donors prefer nonprofits that spend most of their money on programs and do not like funding “overhead.” However, during the pandemic we have seen a significant shift away from that perspective as more donors rely they need to support the entire organization if they want their nonprofits to survive and thrive.

Management and general expenses are supporting expenses that cannot directly tie to your programs. These expenses can include insurance, human resource management, or rental space allocated for administration.

Fundraising expenses are those costs incurred raising contributions for the organization. This could include expenses related to fundraising events, direct mailers requesting donations, and wages of fundraising personnel.

It is important that nonprofits understand how to categorize functional expenses so that they are following IRS guidelines. However, there are no specific IRS requirements given on determining them. Nonprofits need to develop a functional allocation plan and document it. If your Executive Director is spending time thinking and planning how to grow a new service to meet a growing need in the community, that should be considered a program expense. However, if the Executive Director is meeting with a donor, that time is fundraising costs. And if time is spent planning a new hire orientation, then that would fall under Management and General Expenses.

Functional expenses are broken down in a matrix on the 990. They are also critical because of the audience reviewing them. Funders, donors, grantors, regulators, board members and the press all look to the 990 functional expenses as a way to understand how well the nonprofit is spending towards fulfilling their mission. So your organization should pay attention as well as to how your expenses are allocated in order to give the most accurate picture of your organization’s investment in your mission and your community.

Filed Under: Blog, Finance

D&A’s Female Inspirations

March 3, 2021 by Casey Crowell

We have experienced a lot since last March. While we as a nation still have a lot of healing to do, we also have to remember where our strength comes from.

It’s Women’s History Month, and we at Danosky and Associates have taken some time to reflect on some of the inspirational female figures we each look to for strength. Putting together this list of incredible women has given us some time to appreciate how powerful female figures can have a positive impact on our mindset, so we encourage all of our readers to do the same!

[Read more…]

Filed Under: Blog

Gift Acceptance Policy Template

March 1, 2021 by Casey Crowell

Late one evening I received an e-mail from a former client, asking how to turn down a contribution they didn’t feel was aligned with their organization’s values.  A few days later an interesting article appeared in Philanthropy Today, from the Chronicle of Philanthropy.  Nonprofits risk their reputations when they accept gifts from questionable donors. It is one of the reasons for having a Gift Acceptance Policy and a Gift Acceptance Committee.  These issues are seldom black or white.  Basically, you want the ability to direct these questionable contributions to the Board, through a Committee and not have the responsibility (or blame) for accepting or not accepting a potentially controversial gift fall on the shoulders of your Executive Director of President.  I’ve linked the article above, and also included a template for a Gift Acceptance Policy which has seen many revisions over the years. 

Sample Gift Acceptance PolicyDownload

Filed Under: Blog, Members, Strategy

Just LOVE!

March 1, 2021 by Casey Crowell

By Atka Danosky

Just LOVE!

There are some humans that have a problem with other humans who do not look like they look.

And there are some humans that have a problem with other humans who do not live where they live.

And there are some humans that have a problem with other humans who do not speak like they speak.

When a dog meets a human, we welcome them with exuberant joy and an open heart filled and ready to love.  We run to greet them, tails wagging, tongue hanging, spinning in circles, leaping and jumping…Yes. Full of exuberant joy!

Hmmm…Humans spend a lot of time and money teaching dogs how to behave.  Maybe it is time we teach them how to… just LOVE!   It makes you so much happier.

Thoughts to ponder…..

Atka,

Director of Goodwill

Filed Under: Blog, Members

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