The functional expense analysis was once a requirement solely for voluntary health and welfare organizations, leaving many nonprofits happily on the sidelines when it came to reporting functional expenses. Column (C), Management and general expenses. Other Rules and Tips to Consider Don’t recreate the wheel – Take into consideration the functional reporting you are already performing for the Form 990. The Form 990 include investment expenses in the functional expenses, as just mentioned. Attach a schedule Form 990, Part IX • Line 5, EXAMPLE 2 • Director B is not paid as a member of the board, but is A review of a community foundation’s functional expenses on its Form 990 should consist of three steps. (2) “What steps does the foundation need to take to ensure that our fundraising expenses are properly stated? All organizations who complete the IRS Form 990 N (post card), 990-EZ, 990-PF or who do not complete any 990 must complete the Statement of Functional Expense Form. Other/Miscellaneous Expense – As a rule, this natural expense line should not be more than 10% of total expenses. Before the release of ASU 2016-14, only Voluntary Health and Welfare Organizations had to report expenses by nature and function; however, many organizations still reported expenses by nature and function either as a supplemental schedule to the financial statements and/or on the Organizations Form 990 Part IX Statement of Functional Expenses. Financial and accounting personnel should: 1. Column (A) Every expense should be listed here. If the expense includes property other than cash report the expense as the fair market value of the property given. If your organization has investments expenses, in-kind revenue or a different basis of accounting for financial statement purposes then the financial statement and the form 990 statement of functional expenses will not agree. functional expense categories, with specific emphasis on fundraising. Many fiscal year entities wonder why compensation for the Board of Directors and the Executive Director listed in Part VII of the IRS Form 990 varies from the amount listed in the statement of functional expenses in Part IX.