Expenses or Expenditures

Expenses or expenditures report all the expenses made by a nonprofit entity in support of its vision and mission. Categories of expenses will vary by organization. Generic categories of expenses include, but are not limited to, administrative expenses, fund-raising, liabilities and insurance, and programs.

Administrative Expenses

Administrative expenses include all the expenditures incurred for the management and administration of a nonprofit entity, such as salaries, benefits, travel, transportation, facilities, equipment, supplies, utilities, and similar items.


Fund-raising expenses are related to the costs to generate revenues that make it possible to provide services or conduct activities that support the vision and mission of an organization. In order to raise funds, nonprofit organizations must incur some expenses in advance (e.g., printing, mailing, transportation, rent for special events, liability insurance for fund-raising events, etc.).

Liabilities and insurance

Liabilities and insurance expenses are made for risk-management purposes, including the sustainability of the assets of a nonprofit entity.


Program expenses are the expenditures made in direct support of a particular program. The number of program expense categories will vary with the number of programs maintained by a nonprofit entity.


The balance is the difference between revenues or income and expenses. If the balance is positive, there is a profit. If the balance is negative, there is a loss. Consider the case of the Sarah Cupcake Foundation (SCF), which was founded by a 12-year-old girl named Sarah whose mother died from breast cancer. She wanted to raise money to increase awareness about breast cancer screening and early detection. She baked cupcakes and sold them to the members of a local church. Sarah died 1 year later as a result of a car accident involving a drunk driver. Some people started the foundation to continue her legacy. For the year 2009, SCF raised $50,000 from memberships. SCF sold cupcakes for $100,000. The total cost incurred for selling the cupcakes was $15,000. SCF received a $150,000 grant from the American Cancer Society. Also, SCF received corporate gifts, which amounted to $40,000. Individual donors gave $60,000 to SCF. Furthermore, SCF paid $24,000 for rent, $12,000 for utilities and insurance, $180,000 for salaries and benefits, $6,000 for office supplies and telephone, $18,000 for educational materials, and $16,000 for printing promotional materials. Let us list all items that one would consider as income (or revenue) for SCF and its corresponding monetary value. Then, let us calculate the "total revenue." Further, we will list all items that one would consider as expenditures (or expenses) for SCF and its corresponding monetary value. Let us then calculate the total expenditures. Calculate the difference (subtract) between total revenue and total expenditures. With the information obtained from the previous operations, we can prepare a simple income statement.

The income statement developed should look like the sample in Box 9.1.


Sarah Cupcake Foundation

Income Statement for Federal Year Ended December 31, 2009

Revenues (income)


$ 50,000


$ 100,000


$ 150,000

Corporate gifts

$ 40,000

Individual donors

$ 60.000

Total revenue


Expenditures (expenses)

Cost of sales

$ 15,000

Salaries and benefits

$ 180,000


$ 24,000

Office supplies/telephone

$ 6,000

Printing promotion

$ 16,000

Educational materials

$ 18,000

Utilities and insurance

$ 12.000

Total expenditures

$ 271,000

Excess (or deficit) of revenues

$ 129,000

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