# ASC 720-958-45: Other Expenses — Not-for-Profit Entities — 45 Other Presentation Matters Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/720/958/#45-other-presentation-matters) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:ee89d5b7482540fa97ccb58b9e2261aeee64628b1f29bda306a112a2ba29c28f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-958-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/720/958/#45-other-presentation-matters) SEC content: no ##### [720-958-45-1](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:88f05c931a81c8543a300e302614e388c1c336dcefd722168354e2e6e6a72bdb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection provides guidance on the reporting of expenses incurred by [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs) as follows: 1. a Functional classification of expenses 2. b Analysis of expenses by their nature and function 3. c Classification of particular costs. For additional guidance on reporting under these classifications see Section 958-205-45. #### Functional Classification of Expenses ##### [720-958-45-2](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:c3a07993981e99f6bed8cdc7d539a64e0bf66b5efd37700ac18ed56acf2dc81f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To help donors, creditors, and others in assessing an NFP's service efforts, including the costs of its services and how it uses resources, a statement of activities or notes to financial statements shall provide information about expenses reported by their [functional expense classification](https://asc.understandingaccounting.org/glossary/f/#functional-expense-classification "A method of grouping expenses according to the purpose for which costs are incurred. The primary functional classifications of a not-for-profit entity are program services and supporting activities."), such as major classes of [program services](https://asc.understandingaccounting.org/glossary/p/#program-services "The activities that result in goods and services being distributed to beneficiaries, customers, or members that fulfill the purposes or mission for which the not-for-profit entity (NFP) exists. Those services are the major purpose for and the major output of the NFP and often relate to several major programs.") and [supporting activities](https://asc.understandingaccounting.org/glossary/s/#supporting-activities "Supporting activities are all activities of a not-for-profit entity (NFP) other than program services. Generally, they include the following: Management and general activities Fundraising activities Membership development activities."), for example: 1. a Program services 2. b Supporting activities, which often include one or more of the following: 1. 1 [Management and general activities](https://asc.understandingaccounting.org/glossary/m/#management-and-general-activities "Supporting activities that are not directly identifiable with one or more program, fundraising, or membership-development activities.") 2. 2 [Fundraising activities](https://asc.understandingaccounting.org/glossary/f/#fundraising-activities "Activities undertaken to induce potential donors to contribute money, securities, services, materials, facilities, other assets, or time.") 3. 3 [Membership development activities](https://asc.understandingaccounting.org/glossary/m/#membership-development-activities "Membership development activities include soliciting for prospective members and membership dues, membership relations, and similar activities. However, if there are no significant benefits or duties connected with membership, the substance of membership development activities may, in fact, be fundraising."). ##### [720-958-45-2A](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-2A) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:3e8fd289299ba50060d506c1b02f7100468807924e15de51c775eb7f07e9392f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Activities that represent direct conduct or direct supervision of program or other supporting activities require allocation from management and general activities. Additionally, certain costs benefit more than one function and, therefore, shall be allocated. For example, information technology generally can be identified as benefiting various functions, such as management and general (for example, accounting and financial reporting and human resources), fundraising, and program delivery. Therefore, information technology costs generally would be allocated among the functions receiving direct benefit. ##### [720-958-45-3](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:04181ca172ebcecd3f8b4a99d743c279ca73e6d9b237cfedb660fb1bfb3e7a31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Program services are the activities that result in goods and services being distributed to beneficiaries, customers, or members that fulfill the purposes or mission for which the NFP exists. Those services are the major purpose for and the major output of the NFP and often relate to several major programs. For example, a large university may have programs for student instruction, research, and patient care, among others. Similarly, a health and welfare entity may have programs for health or family services, research, disaster relief, and public education, among others. A federated fundraising entity's programs may include making [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") to NFPs supported by the federated fundraising entity. Paragraphs [280-10-50-1 through 50-19](https://asc.understandingaccounting.org/asc/280/10/#280-10-50-1) , although not required of NFPs, may be helpful in determining what constitutes major classes of programs and supporting activities. ##### [720-958-45-4](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:27fdce3163cc86a74ebf2a0ae890e5e2bb7e48f94ddbeab41fdba94836c781b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Information about an NFP's major programs (or segments) can be enhanced by reporting the interrelationships of program expenses and program revenues. For example, a university might report expenses for its instruction and other academic services with related revenues from student tuition and expenses for its housing and food services with related revenues from room and board [fees](https://asc.understandingaccounting.org/glossary/f/#fees "See Compensation."). Related nonmonetary information about program inputs, outputs, and results also is helpful; for example, information about applications, acceptances, admissions, enrollment and occupancy rates, and degrees granted. Generally, reporting that kind of information is feasible only in supplementary information or management explanations or by other methods of financial reporting. ##### [720-958-45-5](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:085223b37243086b32d51c6b77bf7e9b29bbb0b9979468141344896561428ba5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The components of total program expenses shall be evident from the details provided on the face of the statement of activities, unless the notes to financial statements provide the information in paragraph [958-720-50-1(b)](https://asc.understandingaccounting.org/asc/720/958/#720-958-50-1). ##### [720-958-45-6](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:0b56fc50b0c81226685acfc3121746a6f3e89e970f8b5ab9b5322e16b040f5bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Supporting activities are all activities of an NFP other than program services. Generally, supporting activities include the following activities: 1. a [Management and general activities](https://asc.understandingaccounting.org/glossary/m/#management-and-general-activities "Supporting activities that are not directly identifiable with one or more program, fundraising, or membership-development activities.") 2. b [Fundraising activities](https://asc.understandingaccounting.org/glossary/f/#fundraising-activities "Activities undertaken to induce potential donors to contribute money, securities, services, materials, facilities, other assets, or time.") 3. c [Membership development activities](https://asc.understandingaccounting.org/glossary/m/#membership-development-activities "Membership development activities include soliciting for prospective members and membership dues, membership relations, and similar activities. However, if there are no significant benefits or duties connected with membership, the substance of membership development activities may, in fact, be fundraising."). ##### [720-958-45-7](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:0454309a876c5c792f1a3c9ee6b2dc699a2b10ab0151abfeccfb2451e0919bdf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Management and general activities include the following: 1. a Oversight 2. b Business management 3. c General recordkeeping and payroll 4. d Budgeting 5. e Financing, including unallocated interest costs pursuant to paragraph [958-720-45-24](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-24) 6. f Soliciting funds other than [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") and membership dues, for example, the costs associated with: 1. 1 Promoting the sale of goods or services to customers, including advertising costs 2. 2 Responding to government, foundation, and other requests for proposals for customer-sponsored contracts for goods and services 7. ff Administering government, foundation, and similar customer-sponsored contracts, including billing and collecting fees and grant and contract financial reporting 8. g Disseminating information to inform the public of the NFP's stewardship of contributed funds 9. h Making announcements concerning appointments 10. i Producing and disseminating the annual report 11. j [Subparagraph superseded by Accounting Standards Update No. 2012-04](https://asc.understandingaccounting.org/updates/asu-2012-04/). 12. jj Employee benefits management and oversight (human resources) 13. k All other management and administration except for direct conduct of program services (see paragraphs [958-720-45-3 through 45-5](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-3) ), fundraising activities (see paragraphs [958-720-45-9 through 45-10](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-9) ), or membership development activities (see paragraphs [958-720-45-11 through 45-14](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-11) ). See paragraphs [958-720-55-171 through 55-176](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-171) for examples on which activities would constitute direct conduct or supervision of program or support functions and an example footnote disclosure on the cost allocation method used to allocate costs among functions. ##### [720-958-45-8](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:63bddf0e393ec35699bb383466b1fa3790dfa3ea7cd45f8256336d91ba21f6ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The costs of oversight and management usually include the salaries and expenses of the governing board, the chief executive officer of the NFP, and the supporting staff. If such staff spend a portion of their time directly conducting or supervising program services or categories of other supporting services, however, their salaries and expenses shall be allocated among those functions (see paragraph [958-720-45-2A](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-2A)). See paragraphs [958-720-55-171 through 55-176](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-171) for examples on which activities would constitute direct conduct or supervision of program or support functions and an example note disclosure on the method used to allocate costs among functions. ##### [720-958-45-9](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:dc1a59b6730403eee5ca9c2824079a23f9a656265805ef6800f540fe32e5a425 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Fundraising activities include the following: 1. a Publicizing and conducting fundraising campaigns 2. b Maintaining donor mailing lists 3. c Conducting special fundraising events 4. d Preparing and distributing fundraising manuals, instructions, and other materials 5. e Conducting other activities involved with soliciting contributions from individuals, foundations, government agencies, and others. ##### [720-958-45-10](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:942fdd4e3df3ac868d04ac7e2c57ec389611a0a17e9c30cf8ff5e8c869422957 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Fundraising activities include soliciting contributions of services from individuals, regardless of whether those services meet the recognition criteria for contributions in the [Contributions Received Subsection](https://asc.understandingaccounting.org/updates/page-2147480583/) of Section 958-605-25. ##### [720-958-45-11](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:c7cef90009bdce2e18979ee01e08916f94f346e87c6a90d8eab6aec3941fa436 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Membership development activities include the following: 1. a Soliciting for prospective members and membership dues 2. b Membership relations 3. c Similar activities. ##### [720-958-45-12](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:b1c16cef57065c5d3164577aa5d2ad6eb463061b78ebc0a3fdf690af5f9e5100 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there are no significant benefits or duties connected with membership, however, the substance of membership development activities may, in fact, be fundraising, and the related costs shall be reported as fundraising costs. (See paragraphs [958-605-55-9 through 55-12](https://asc.understandingaccounting.org/asc/605/958/#605-958-55-9) for indicators useful in determining the contribution and exchange portions of membership dues.) ##### [720-958-45-13](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:23668e663aaaffa5609cdc5eba5ac04473e4136e578dcdc06c7231519a568fb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Membership development activities may be conducted in conjunction with other activities. In circumstances in which membership development is in part soliciting membership dues and in part soliciting contributions, the activity is a [joint activity](https://asc.understandingaccounting.org/glossary/j/#joint-activity "An activity that is part of the fundraising function and has elements of one or more other functions, such as program, management and general, membership development, or any other functional category used by the entity."), as discussed in the Accounting for Costs of Activities that Include Fundraising Subsections of this Subtopic beginning with paragraph [958-720-45-28](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-28). ##### [720-958-45-14](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:aa8e349fb859f8630da3373f022ec3f26f9fe8438236586a397200f21398e44a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In circumstances in which membership development is conducted in conjunction with other activities but does not include soliciting contributions, the activity is not a joint activity, and the costs shall be allocated to membership development and one or more other functions. For example, if an activity involves costs to solicit new members (membership development) and direct costs of providing goods or services to existing members, in accordance with paragraph [958-720-45-3](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-3), an appropriate part of the costs of soliciting members shall be allocated to the membership development function and a part to program services. #### Analysis of Expenses by Their Nature and Function ##### [720-958-45-15](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:5b8ae3b66483da687bed1d0db2125c2e0830a8912d0cba4c4924bf8bad108098 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All NFPs shall report information about all expenses in one location on the face of the statement of activities, as a schedule in the notes to financial statements, or in a separate financial statement, as discussed in paragraph [958-205-45-6](https://asc.understandingaccounting.org/asc/205/958/#205-958-45-6). The relationship between functional classification and natural classification for all expenses shall be presented in an analysis that disaggregates [functional expense classifications](https://asc.understandingaccounting.org/glossary/f/#functional-expense-classification "A method of grouping expenses according to the purpose for which costs are incurred. The primary functional classifications of a not-for-profit entity are program services and supporting activities."), such as major classes of [program services](https://asc.understandingaccounting.org/glossary/p/#program-services "The activities that result in goods and services being distributed to beneficiaries, customers, or members that fulfill the purposes or mission for which the not-for-profit entity (NFP) exists. Those services are the major purpose for and the major output of the NFP and often relate to several major programs.") and [supporting activities](https://asc.understandingaccounting.org/glossary/s/#supporting-activities "Supporting activities are all activities of a not-for-profit entity (NFP) other than program services. Generally, they include the following: Management and general activities Fundraising activities Membership development activities."), by their [natural expense classifications](https://asc.understandingaccounting.org/glossary/n/#natural-expense-classification "A method of grouping expenses according to the kinds of economic benefits received in incurring those expenses. Examples of natural expense classifications include salaries and wages, employee benefits, professional services, supplies, interest expense, rent, utilities, and depreciation. (P) December 16, 2026; (N) December 16, 2026220-40-65-1A method of grouping expenses according to the types of economic benefits received in incurring those expenses. Examples of natural expense classifications include salaries and wages, employee benefits, nonemployee professional services, supplies, interest expense, rent, utilities, and depreciation."), such as salaries, rent, electricity, interest expense, supplies, depreciation, awards and grants to others, and professional fees. To the extent that expenses are reported by other than their natural classification (such as salaries included in cost of goods sold or facility rental costs of special events reported as direct benefits to donors), they shall be reported by their natural classification in the analysis of expenses by nature and function. For example, salaries, wages, and fringe benefits that are included as part of the cost of goods sold on the statement of activities shall be included with other salaries, wages, and fringe benefits in the analysis of expenses by nature and function. External and direct internal investment expenses that have been netted against investment return shall not be included in the analysis of expenses by nature and function. Certain items that are typically excluded from net income and that are included in other comprehensive income of business entities such as those items listed in paragraph [220-10-45-10A](https://asc.understandingaccounting.org/asc/220/10/#220-10-45-10A), are considered gains or losses and, like other gains and losses, shall not be included in the analysis of expenses by nature and function. See Note F in paragraph [958-205-55-21](https://asc.understandingaccounting.org/asc/205/958/#205-958-55-21) for an example of how to report expenses by nature and function. ##### [720-958-45-16](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:bf2f8592e516ba6cfd98adc2ae4aabb779540989656beebb27641608560190ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-14](https://asc.understandingaccounting.org/updates/asu-2016-14/). #### Classification of Particular Costs ##### [720-958-45-17](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:762819eac2dd07b292f13d47f89b70ffbdd107937c6cc8efb14af043a2718cd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection provides classification guidance for the following specific costs: 1. a Cost of premiums 2. b Cost of sales 3. c Reductions in amounts charged for goods and services 4. d Interest costs 5. e Cost of occupancy and maintenance 6. f Payments to affiliated NFPs 7. g Expenses of federated fundraising organizations. ##### [720-958-45-18](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:9edad955600fe8ae8fda43c2772209f9736a842fac7fcce4be74b86ab8e47724 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cost of premiums (such as postcards or calendars) given to potential donors as part of mass fundraising appeals is a fundraising expense, and the classification of the donations received from the appeal as contributions is unaffected by the fact that premiums were given to potential donors. The premiums are not provided to potential donors in exchange for the assets contributed; they can be kept by all those from whom funds are solicited, regardless of whether a contribution is made. ##### [720-958-45-19](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:e7db54f45504df3cf18af238896cf68cd6e51435673c27fb8521f10ac8a39654 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cost of premiums (such as coffee mugs) that are given to resource providers to acknowledge receipt of a contribution shall also be reported as fundraising expenses if those costs are nominal in value compared with the value of the goods or services donated by the resource provider. For example, an NFP may provide a coffee mug to people making a contribution of $50 or more; the mug costs the NFP $1. The NFP shall recognize contributions for the total amount contributed and fundraising expense of $1 for each mug provided to donors. The cost of premiums that are greater than nominal in value shall be reported as cost of sales. If premiums are greater than nominal in value, transactions shall be reported as part exchange transaction and part contribution. ##### [720-958-45-20](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:b4cc37c8b6a22c6b17e0861136dd2acc143d7cf985ba9f20ee7fca8056922682 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The way that costs related to sales of goods and services are displayed depends on whether the sales constitute a major or central activity of the NFP or a peripheral or incidental activity. ##### [720-958-45-21](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:d88cba69cb23de8826f457d91b1b46bd38a40c1d64e3f557920913e7ea5d61d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, a not-for-profit museum that has a store that is a major or central activity shall report and display separately the revenues from the store's sales and the related cost of sales. Cost of sales is permitted to be reported immediately after revenues from sale of merchandise, and may be followed by a descriptive subtotal, or cost of sales may be reported with other expenses. If the store sells merchandise that is related to the museum's program, the store would be a program service and the cost of the store's sales would be reported as a program expense. In other circumstances, cost of sales could be reported as a separate supporting service. For example, if operating a cafeteria is a major or central activity but is not related to the NFP's programs, the cafeteria's cost of sales would be reported as supporting services. ##### [720-958-45-22](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:e42c14b2727b232b7975d47b62a5d6429f9a87275e7c65c7857dcf9301ab17e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In contrast, a not-for-profit church that occasionally produces and sells a cookbook (considered to be a peripheral or incidental activity) has gains (or losses) from those sales, and the receipts and related costs are permitted to be offset and only the net gains (or losses) are reported. ##### [720-958-45-23](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:acf397bedac1f0d845d132fc4e78bd238169ddda2456b80c18c5e5176c2c0ee2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a reduction in the amount charged for goods and services is reported as an expense in accordance with paragraph [958-720-25-7](https://asc.understandingaccounting.org/asc/720/958/#720-958-25-7), the expense shall be reported in the same functional classification in which the cost of the goods or services provided to the NFP are reported. ##### [720-958-45-24](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:b4ac625158fea6749e113dc502c7838e5914b9d616d36c79caa69ae334c5aec3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest costs, including interest on a building's mortgage, shall be allocated to specific programs or supporting services to the extent possible. Interest costs that cannot be allocated shall be reported as part of the management and general function. ##### [720-958-45-25](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:7b22b7f2521ff7cccc52ae50e530d6771ef47101a5afeb9214f5f1f31748de3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Occupying and maintaining a building is not a separate supporting service. ##### [720-958-45-26](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:e8f397c87358356504b01b73857834ae34b18807d4575ba645808fcfc1ec2357 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payments to related local and national NFPs shall be reported by their functional classification to the extent that it is practicable and reasonable to do so and the necessary information is available, even if it is impossible to allocate the entire amount of such payments to functions. Payments to those entities that cannot be allocated to functions shall be treated as a separate supporting service, reported on a statement of activities as a separate line item, and labeled unallocated payments to local (or national) organizations. ##### [720-958-45-27](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:a989fd0f099f9282504225cc2899d2854dd866ac8d089486e01d91bc6aec58b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Federated fundraising entities solicit and receive designated and undesignated contributions and make grants and awards to other NFPs. The fundraising activities of federated fundraising entities, including activities related to fundraising on behalf of others, shall be reported as fundraising expenses. ### Accounting for Costs of Activities that Include Fundraising ##### [720-958-45-28](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:e9c9c7fb9e47af3ce75b5ab26dbc6e5c8619a5b11e8304b569d19f6a92f48d4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subsection provides guidance on the following: 1. a Classification of the costs of a joint activity 2. b Allocation methods 3. c Incidental activities. #### Classification of the Costs of a Joint Activity ##### [720-958-45-29](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:57c70e448cd9c49a7a04f2b460f46313601441c7b8d8a7f5983f5028b2040f2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the criteria of purpose, audience, and content are met, the costs of a [joint activity](https://asc.understandingaccounting.org/glossary/j/#joint-activity "An activity that is part of the fundraising function and has elements of one or more other functions, such as program, management and general, membership development, or any other functional category used by the entity.") shall be classified as follows: 1. a The costs that are identifiable with a particular function shall be charged to that function. 2. b [Joint costs](https://asc.understandingaccounting.org/glossary/j/#joint-costs "The costs of conducting joint activities that are not identifiable with a particular component of the activity. For example, the cost of postage for a letter that includes both fundraising and program components is a joint cost. Joint costs may include the following costs: Salaries Contract labor Consultants Professional fees Paper Printing Postage Event advertising Telephones Airtime Facility rentals.") shall be allocated between fundraising and the appropriate program or management and general function. If any of the criteria are not met, all costs of the joint activity shall be reported as fundraising costs, including costs that otherwise might be considered program or management and general costs if they had been incurred in a different [activity](https://asc.understandingaccounting.org/glossary/a/#activities "Activities are efforts to accomplish specific objectives. Some activities include producing and distributing materials. For example, if a not-for-profit entity (NFP) undertakes a mass mailing that includes a letter and a pamphlet, producing and distributing the letter and pamphlet are part of the activity. Other activities may include no materials, such as an annual dinner or a radio commercial."), subject to the exception in the following sentence. Costs of goods or services provided in exchange transactions that are part of joint activities, such as costs of direct donor benefits of a special event (for example, a meal), shall not be reported as fundraising. ##### [720-958-45-30](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:6841ce1f6dd601861fdc8f0979c6cb2493b34dfb9b21b4ff9df7f8e198ea214c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In circumstances in which a [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) that conducts joint activities has a functional structure that includes functional classifications other than fundraising, program, and management and general (see paragraph [958-720-05-6](https://asc.understandingaccounting.org/asc/720/958/#720-958-05-6)), all costs of those joint activities shall be charged to fundraising (or the category in which fundraising is reported), unless the purpose, audience, and content of those joint activities are appropriate for achieving those other functions. ##### [720-958-45-31](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:46f99cd1e7976da114d9b485649102d7b74ef1d2774facdcf416cbc0bcd9c0da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Classification of costs incurred by an NFP for joint activities is based on the following criteria: 1. a The purpose criterion 2. b The audience criterion 3. c The content criterion. ##### [720-958-45-32](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:e4eb0291f9c542c67e3d2b73038339992a3ccc908102635f22fa67c3dcc0513a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples 1 through 16 (see paragraphs [958-720-55-36 through 55-159](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-36) ) provide illustrations of the tests and analysis that are used to determine whether the criteria listed in the preceding paragraph are met. ##### [720-958-45-33](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:19799ead7be508aed97d2467b47a2a1ad67a1e94aac081043412e84982fdec7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The purpose criterion is met if the purpose of the joint activity includes accomplishing program or management and general functions. ##### [720-958-45-34](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:a2ff396f27b6a263f118c8b1eb6631cfcefa5e9071bb0737f56b83bd8e100d80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [958-720-45-35 through 45-39](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-35) provide guidance that shall be considered in determining whether the purpose criterion is met, specifically: 1. a If program functions are combined with [fundraising activities](https://asc.understandingaccounting.org/glossary/f/#fundraising-activities "Activities undertaken to induce potential donors to contribute money, securities, services, materials, facilities, other assets, or time."), paragraphs [958-720-45-35 through 45-39](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-35) provide guidance pertaining to program functions only. 2. b If program functions, management and general functions, or both are combined with fundraising activities, paragraph [958-720-45-38](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-38) provides guidance pertaining to both program and management and general functions. ##### [720-958-45-35](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:0d6fcd2de54712449f44988ea1c9d3594405d34a0ce6ac31f2002ebbf01a1321 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To accomplish program functions, the activity shall call for specific action by the audience that will help accomplish the NFP's mission. Actions that help accomplish the NFP's mission are actions that do either of the following: 1. a Benefit the recipient (such as by improving the recipient's physical, mental, emotional, or spiritual health and well-being) 2. b Benefit society (by addressing societal problems). ##### [720-958-45-36](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:52f2ca4ef1aa48122ee393ec0931e1b486f067d43c94b2a67dfffc2f6161db2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [958-720-55-4 through 55-5](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-4) , which provide implementation guidance for determining whether an activity includes a call for a specific action. If the activity calls for specific action by the audience that will help accomplish the NFP's mission, the guidance in paragraph [958-720-45-38](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-38) shall also be considered in determining whether the purpose criterion is met. ##### [720-958-45-37](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:9585e58066f1c87a3f3d90dcf7bf18f675ad256609beba0edc9cdd80488722f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In circumstances in which joint activities are conducted, a presumption exists that expenses shall be reported as fundraising rather than as program or management and general. The following circumstances are insufficient to overcome that presumption: 1. a The purpose of the activity includes educating the public about [causes](https://asc.understandingaccounting.org/glossary/c/#causes "The causes, conditions, needs, or concerns that a not-for-profit entity's (NFP's) programs are designed to address."). 2. b The audience has a need or reasonable potential for use of any educational component of the activity pertaining to causes. 3. c The audience has the ability to assist the NFP in meeting the goals of the program component of the activity by becoming educated about causes. To conclude that the criteria of purpose, audience, and content are met, program activities shall call for specific action by the recipient (other than becoming educated about causes) that will help accomplish the NFP's mission. ##### [720-958-45-38](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:b96531997329c3e995f435215aaff97c3add2d3ce8be20ed886b38e37bb5efb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following factors shall be considered, in the order in which they are listed, to determine whether the purpose criterion is met: 1. a The compensation or fees test 2. b The separate and similar activities test 3. c The other evidence test. ##### [720-958-45-39](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:77949bb24a6c227c59336d87bc0b145920e3b6fa622bbbc2cba686a0e9b28262 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Examples 1 through 16 (paragraphs [958-720-55-36 through 55-159](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-36) ), which provide implementation guidance for these three tests. ##### [720-958-45-40](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:4e0aaf3916b1d199c24d0e92b6f299a9c6b24e3c3ea4485adf74b39be8345060 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The purpose criterion is not met if a majority of compensation or fees for any party's performance of any component of the discrete joint activity varies based on [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") raised for that discrete joint activity. ##### [720-958-45-41](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:e3e71f5108d7e6ed2d463ab92c8e16551fc791d076daa1a2a00b4088b86fbdd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some compensation contracts provide that compensation for performing the activity is based on a factor other than contributions raised, but not to exceed a specified portion of contributions raised. For example, a contract may provide that compensation for performing the activity is $10 per contact hour, but not to exceed 60 percent of contributions raised. In such circumstances, compensation is not considered based on amounts raised, unless the stated maximum percentage is met. In circumstances in which it is not yet known whether the stated maximum percentage is met, compensation is not considered based on amounts raised, unless it is probable that the stated maximum percentage will be met. ##### [720-958-45-42](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:174c2f47bc4f92ae6fb7bad2453a16c511211e7689c0a3856417e5ede35108e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The compensation or fees test is a negative test in that it either: 1. a Results in failing the purpose criterion 2. b Is not determinative of whether the purpose criterion is met. ##### [720-958-45-43](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:80b065558988a2593c73f0bdc1e7cbe28bd8067749411d44f858d9c46f144ef7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In considering the guidance in paragraph [958-720-45-38](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-38), compensation or fees test is the preeminent guidance. Therefore, if the activity fails the compensation or fees test, the activity fails the purpose criterion and the separate and similar activities test shall not be considered. ##### [720-958-45-44](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:23eabe431df3c2227fee53d5a7c6347c82590e4b14ab7a3f80eac8de7c068e84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the purpose criterion is not failed based on the compensation or fees test, this factor is not determinative of whether the purpose criterion is met, and the factor in the following paragraph and paragraph [958-720-45-46](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-46) (the separate and similar activities test) shall be considered. ##### [720-958-45-45](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:aa6130e32b87c1a62a1ff6e9ccba13deee12353e19959c904a165e820e28c2cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The purpose criterion is met if a similar program or management and general activity is conducted separately and on a similar or greater scale. That is, the purpose criterion is met if either of the following conditions is met: 1. a The first condition is met if both of the following are true: 1. 1 The program component of the joint activity calls for specific action by the recipient that will help accomplish the NFP's mission (see paragraphs [958-720-45-35 through 45-37](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-35) ). 2. 2 A similar program component is conducted without the fundraising component using the same [medium](https://asc.understandingaccounting.org/glossary/m/#medium "A means of mass communication, such as direct mail, direct response advertising, or television.") and on a scale that is similar to or greater than the scale on which it is conducted with the fundraising. Determining the scale on which an activity is conducted may be subjective. Factors to consider in determining the scale on which an activity is conducted may include dollars spent, the size of the audience reached, and the degree to which the characteristics of the audience are similar to the characteristics of the audience of the activity being evaluated. 2. b The second condition is met if a management and general activity that is similar to the management and general component of the joint activity being accounted for is conducted without the fundraising component using the same medium and on a scale that is similar to or greater than the scale on which it is conducted with the fundraising. ##### [720-958-45-46](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:39c1ab08f15b2358abed37f784faabbd8a04f460fdb45d871fc2fc8a10221c06 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the purpose criterion is met based on the separate and similar activities test, the other evidence test shall not be considered. If the separate and similar activities test is not determinative, the other evidence test shall be considered. ##### [720-958-45-47](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:4a6046f6954d7c9429bdd9f8ba21c25a806e91e041f60a549dd6ff299abab725 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The compensation or fees test and the separate and similar activities test may not always be determinative because the attributes that they consider may not be present. If the factors in paragraphs [958-720-45-40 through 45-44](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-40) or [958-720-45-45 through 45-46](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-45) do not determine whether the purpose criterion is met, other evidence may determine whether the criterion is met. All available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, the purpose criterion is met. See paragraphs [958-720-55-6 through 55-9](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-6) , which provide implementation guidance for applying the other evidence test. ##### [720-958-45-48](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-48) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:08f2fb48e7dcef804d05aeca88b47bd87032f72fc82f0d53b33da8f2d759b508 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A rebuttable presumption exists that the audience criterion is not met if the audience includes prior donors or is otherwise selected based on its ability or likelihood to contribute to the NFP. That presumption can be overcome if the audience is also selected for any of the reasons in the following paragraph. In determining whether that presumption is overcome, an NFP shall consider the extent to which the audience is selected based on its ability or likelihood to contribute to the NFP and contrast that with the extent to which it is selected for one or more of the reasons in the following paragraph. For example, if the audience's ability or likelihood to contribute is a significant factor in its selection and it has a need for the action related to the program component of the joint activity, but having that need is an insignificant factor in its selection, the presumption would not be overcome. ##### [720-958-45-49](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-49) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:a72a0411621678d79600a5740151c010595babdb9dc2d4ba0704d3473f693dd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In circumstances in which the audience includes no prior donors and is not otherwise selected based on its ability or likelihood to contribute to the NFP, the audience criterion is met if the audience is selected for any of the following reasons: 1. a The audience's need to use or reasonable potential for use of the specific action called for by the program component of the joint activity 2. b The audience's ability to take specific action to assist the NFP in meeting the goals of the program component of the joint activity 3. c The NFP is required to direct the management and general component of the joint activity to the particular audience or the audience has reasonable potential for use of the management and general component. ##### [720-958-45-50](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-50) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:672d4f9519aa73c5b0fcc282d1e73514078923aaac5bad18377bc6d572ff1e91 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The content criterion is met if the joint activity supports program or management and general functions, as follows: 1. a Program. The joint activity calls for specific action by the recipient that will help accomplish the NFP's mission (see paragraph [958-720-45-35](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-35)). If the need for and benefits of the action are not clearly evident, information describing the action and explaining the need for and benefits of the action is provided. 2. b Management and general. The joint activity fulfills one or more of the NFP's management and general responsibilities through a component of the joint activity. ##### [720-958-45-51](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-51) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:e7485d97e835e3a6571ce30d520e9a78bd549e52c5d248af591655188c581c00 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Information identifying and describing the NFP, its causes, or how the contributions provided will be used is considered in support of fundraising. ##### [720-958-45-52](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-52) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:157e0420f5cc7217cc9a1742d33cfea8ebb9c6d7fb5e1517249249fd1bab972c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Activities that are undertaken as a result of receiving contributions are [management and general activities](https://asc.understandingaccounting.org/glossary/m/#management-and-general-activities "Supporting activities that are not directly identifiable with one or more program, fundraising, or membership-development activities."). For example, activities conducted to comply with requirements of regulatory bodies concerning contributions that have been received are management and general activities. ##### [720-958-45-53](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-53) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:3b04dbb3889627e8e384e691bc8011db014eb79551c3ed3e575e7d744dfc98ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Activities that are undertaken in order to solicit contributions are fundraising activities. For example, activities conducted to comply with requirements of regulatory bodies concerning soliciting contributions, such as the requirement by some states or other regulatory bodies that certain disclosures be included when soliciting contributions, are fundraising activities. For purposes of applying this guidance, communications that include such required disclosures are considered fundraising activities and are not considered management and general activities. #### Allocation Methods ##### [720-958-45-54](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-54) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:4a485af0bece5cfdcc326f33dcf3d968031453e79875bacfd07078c4687211f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cost allocation methodology used shall be rational and systematic, it shall result in an allocation of joint costs that is reasonable, and it shall be applied consistently given similar facts and circumstances. See paragraphs [958-720-55-25 through 55-31](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-25) , which provide explanations and illustrations of some acceptable allocation methods. The allocation of joint costs shall be based on the degree to which costs were incurred for the functions to which the costs are allocated (that is, program, management and general, or fundraising). For purposes of determining whether the allocation methodology for a particular joint activity is consistent with methodologies used for other particular joint activities, facts and circumstances that may be considered include factors related to the content and relative costs of the components of the activity. The audience shall not be considered in determining whether the facts and circumstances are similar for purposes of determining whether the allocation methodology for a particular joint activity is consistent with methodologies used for other particular joint activities. A change in cost allocation methodology shall be evaluated in accordance with Topic 250 to determine if it is a change in accounting principle. #### Incidental Activities ##### [720-958-45-55](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-55) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:6f8a9767ab5ee99de3634c575774eb1783ac28f5d1bd50c5935386ed73a087a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some fundraising activities conducted in conjunction with program or management and general activities are incidental to such program or management and general activities. In circumstances in which a fundraising, program, or management and general activity is conducted in conjunction with another activity and is incidental to that other activity, and the criteria in paragraph [958-720-45-29](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-29) for allocation are met, joint costs are permitted but not required to be allocated and may therefore be charged to the functional classification related to the activity that is not the incidental activity. However, in circumstances in which the program or management and general activities are incidental to the fundraising activities, it is unlikely that the criteria in that paragraph to permit allocation of joint costs would be met. See paragraphs [958-720-55-161](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-161), [958-720-55-163](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-163), and [958-720-55-165](https://asc.understandingaccounting.org/asc/720/958/#720-958-55-165) for implementation guidance for incidental activities. ### Services Received from Personnel of an Affiliate ##### [720-958-45-56](https://asc.understandingaccounting.org/asc/720/958/#720-958-45-56) Pending content: no Source downloaded (UTC): 2026-09-10T01:13:16.668Z to 2026-09-10T01:13:16.668Z Record version: sha256:f67eab80499f796d84c8976484e9c7c93877c572dd951f663b146a7a5a0d8c03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The increase in net assets associated with services received from personnel of an [affiliate](https://asc.understandingaccounting.org/glossary/a/#affiliate "A party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with an entity. See Control.") that directly benefit the recipient [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFP) and for which the affiliate does not charge the recipient NFP shall not be presented as a contra-expense or a contra-asset. The corresponding decrease in net assets or the creation or enhancement of an asset resulting from the use of services received from personnel of an affiliate that directly benefit the recipient NFP and for which the affiliate does not charge the recipient NFP shall be presented similar to how other such expenses or assets are presented. See paragraph [958-220-45-21](https://asc.understandingaccounting.org/asc/220/958/#220-958-45-21) for presentation guidance on services received from personnel of an affiliate.