Supporting services expenses
/What are Supporting Services Expenses?
Supporting services expenses are the management and fundraising expenses of a nonprofit entity. All other expenses are classified as program expenses. Donors want to see a low percentage of supporting services expenses, which implies that the bulk of their donations are going toward the achievement of the nonprofit’s goals. When this is not the case, donors are less likely to make contributions to a nonprofit.
The main classifications of supporting services expenses are as follows:
Fundraising expenses. This category includes the costs of all fundraising activities, which may include mailers, cold calls, fundraising events, and the use of third party fundraising consultants.
Management and general expenses. This category includes all of a nonprofit’s administrative activities that are not associated with fundraising. Examples of these costs are rent, utilities, and other office expenses, as well as the compensation of the nonprofit’s managers. These expenses are essential for the overall operation of a nonprofit.
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Examples of Supporting Services Expenses
The main classifications of supporting services are expenses are noted below.
Management & General Expenses
These expenses cover overall operations, governance, and compliance.
Executive salaries and benefits. Payment for the executive director, finance manager, and administrative staff.
Office rent and utilities. Costs for the nonprofit’s headquarters, including electricity, water, and internet.
Accounting and audit fees. Payment to accountants and auditors for financial management and compliance with nonprofit regulations.
Insurance costs. Coverage for general liability, workers' compensation, and directors' & officers' insurance.
IT support and software licenses. Costs for maintaining databases, cybersecurity, and software like Microsoft Office or QuickBooks.
Training and professional development. Fees for workshops, certifications, and leadership training for nonprofit staff.
Human resources services. Salaries of HR personnel or outsourced HR management services.
Legal fees. Retainers for legal counsel to ensure compliance with tax laws, employment regulations, and nonprofit governance.
Fundraising Expenses
These are costs associated with raising money for the nonprofit’s programs.
Fundraising event costs. Venue rental, catering, and promotional materials for a charity gala.
Donor management software. Subscription fees for platforms like Salesforce or Bloomerang to track and engage donors.
Grant writing services. Salaries or consultant fees for professionals who write grant proposals.
Marketing and advertising. Expenses for social media campaigns, brochures, and email newsletters to attract donors.