Budgeting Basics and Beyond

24.12. Functional or Program Reporting

Certain not-for-profit organizations, such as voluntary health and welfare, report expenses by function (or program). These reports should also have supporting schedules that provide details of the items included for each program. Under functional reporting, expenses (expenditures) are accumulated according to the program purpose for which the costs were incurred, rather than by the object of expenditure (i.e., research program).

There should be a preliminary budget for each program, so that the organization may compare benefits and costs before selecting among programs. Before the chosen programs can be implemented, a final budget must be formed so that the managers know the amount of resources that is planned for the programs, the sources of these dollars (from grants, fees, and so on), and the way those dollars are expected to be allocated among competing uses within each program, as well as a schedule of expenditures and receipts over the life of the program.