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Better Business Bureau ®
Start With Trust®
Wisconsin
Standard 12

Include in the financial statements a breakdown of expenses (e.g., salaries, travel, postage, etc.) that shows what portion of these expenses was allocated to program, fund raising, and administrative activities. If the charity has more than one major program category, the schedule should provide a breakdown for each category.

Information Needed from Charity to Determine Compliance:

The charity provides financial statements, as described in Standard 11, that include a breakdown of expenses as indicated below.

Application:

In further explanation of the requirements of this standard, the Alliance notes the following:

  1. The detailed functional breakdown of expenses described below is required by generally accepted accounting principles (GAAP) to be included in the audit reports for all voluntary health and welfare charities (Financial Accounting Standards Board, Statement of Financial Accounting Standards No. 117, paragraph 26). The Alliance requires that all charities, whether or not they fall under the voluntary health and welfare category, include such a schedule in their financial statements.

  2. An example of such a detailed breakdown of expenses is shown below. It displays the portion of natural expenses (e.g., salaries, travel, postage, etc.) incurred for each major program service, fund raising and administrative expenses.

    Program Service A

    Program Service B

    Medical Research

    Health Education

    Fund Raising

    Adminis-trative

    Total Expenses

    Salaries

    60,000

    30,000

    47,000

    69,000

    206,000

    Occupancy

    10,000

    8,000

    6,000

    5,000

    29,000

    Grants

    210,500

    210,500

    Travel

    1,000

    2,000

    2,000

    5,000

    Telephone

    2,000

    1,000

    3,000

    750

    6,750

    Postage

    3,000

    2,000

    4,500

    1,500

    11,000

    Office Supplies

    2,500

    500

    500

    750

    4,250

    Printing

    11,000

    8,500

    5,000

    1,000

    25,500

    TOTAL

    300,000

    52,000

    68,000

    78,000

    498,000



  3. If the charity has more than one major program service activity (e.g., both medical research and health education), then the detailed functional breakdown of expenses described above should include a separate expense category for each of these programs.