2 Accounting Issues You Need to Understand

Joint cost allocation
Nonprofits have three big buckets in which to categorize expenses: program costs, fundraising costs and administrative costs. Program costs refer to money spent in the delivery of a nonprofit organization’s mission (e.g., feeding the hungry, medical research, rescuing animals, advocacy for veterans). Fundraising costs are the dollars spent raising money for the cause. Administrative costs refer to the cost of managing the organization. When combined, the latter two categories are also known as the organization’s overhead costs.