FAR NFP · Updated November 2026
Program, Management and General, or Fundraising: Where Does the NFP Expense Go?
Natural classification tells you what was spent. Functional classification tells you why it was spent.
Program services
Program expenses support the organization's mission-related activities and services.
Management and general
These expenses support overall administration and governance rather than a specific program or fundraising campaign.
Fundraising
Fundraising costs support efforts to solicit contributions and other donor support.
Allocation
Shared costs can require reasonable allocation among functions when one activity supports multiple purposes.
The takeaway
NFP expense reporting separates the nature of the cost from the function it supports.
Related Summit guides
FAQ
Is salary always management and general?
No. Salary is a natural expense and can support different functions.
Can one cost be allocated among functions?
Yes.
Does functional classification replace natural classification?
No. Both can be relevant.