If a not-for-profit incurs $200,000 in management and general expenses, how should these be reported when expenses are allocated by function?

• A. Administrative expenses
• B. Community outreach expenses
• C. Program expenses
• D. Supporting services expenses

Answer: (D)

In not-for-profit reporting, expenses are shown by function, separating program services from supporting services. Management and general costs are necessary to run the organization but do not directly tie to delivering programs, so they belong under supporting services. Therefore, the $200,000 would be reported as supporting services expenses on the statement of activities (the category that also includes fundraising and governance costs). It isn’t a program expense because it doesn’t directly fund the organization’s programs, and it isn’t an isolated administrative line separate from supporting services in this functional presentation. Community outreach, by contrast, is a program service and would be reported separately under program expenses.