Understanding Supporting Service Costs in a Statement of Activities for a Not-for-Profit Entity

What are the broad categories of supporting service costs required to be reported on a Statement of Activities for a not-for-profit entity?

a) Fund-raising expenses and operating expenses.

b) Program services expenses and administrative services expenses.

c) Fund-raising expenses and supporting services expenses.

d) Fund-raising expenses and administrative expenses.

Answer:

On a Statement of Activities for a not-for-profit entity, the broad categories of supporting service costs required to be reported are program services expenses and administrative services expenses.

Program services expenses represent the costs directly associated with the organization's programs and activities that fulfill its mission. These expenses are related to the specific services provided by the organization to its beneficiaries or the community.

Administrative services expenses, on the other hand, encompass the costs of general management and oversight necessary to support the organization's programs and operations. These expenses include administrative staff salaries, office rent, utilities, professional fees, and other general administrative costs.

Fund-raising expenses are not considered supporting service costs. They are typically reported separately as a functional expense category, reflecting the costs incurred in soliciting contributions and other resources for the organization's activities.