July - Sept 2025

We started this series in our previous newsletter to help you understand deputized fundraising—which is the official name for what WorldVenture calls “partner development.”  In part 1, we began by explaining that, like it or not, you regularly engage in a practice called “functional expense reporting.”  (See that article for a definition, as well as a more detailed explanation of why understanding this is of critical importance for you.)  In this article, we will give you a better idea of how to know which expenses fall into each of the three categories.

As a brief review, here are the three “functional expense” categories identified by Generally Accepted Accounting Principles (GAAP), and a general description of each:

1. Management and general – these are the overhead costs necessary for the operation and management of the organization in general. They include administrative salaries, office expenses, and other expenses that do not relate directly to any specific program.
2. Fundraising – all expenses related to soliciting donations, grants, or any other form of financial support to fund the organization’s mission.
3. Program services – these expenses relate directly to the mission-driven activities of the organization.

To help you in determining which functional category you need to use for any given expense, let’s flesh this out a bit with some examples.  We’ll get more specific, but here’s a preliminary list for each category.

• Management and general is the category you’re least likely to use. It involves mostly “home office” related expenses, such as:
  • Salaries and benefits for executives and HQ administrative staff
  • Office rent and utilities
  • General office equipment and supplies
• The next category is Fundraising. This would involve things like:
  • Marketing, advertising, and fundraising appeals
  • Fundraising events
  • Solicitation of donations
  • Salaries of staff involved primarily in fundraising
• Finally, the category most closely related to Global Workers, is Program Services:
  • Salaries & benefits for program staff (i.e., Global Workers)
  • Materials and supplies used in programs (that is, your ministry, as well as Special Projects)
  • Pretty much any funds used for ministry, such as all Work Funds, as well as any expenses you get reimbursed for your ministry activities

Profitable businesses have no parallel for the statement of functional expenses.  A typical profitable business’s financial statement lists postage as a single type of expense.  A non-profit’s functional expense report answers the question, what was the postage used for (in terms of fundraising, programs, or overhead)?  A typical profitable business tracks the cost of rent or travel; a non-profit’s report looks at what was the rented space used for, and what was the purpose of the travel (fundraising, programs, or management)?

This is why you need to keep in mind the missional purpose of your expenses, not just what traditional type of expense it was.  Let’s take an example.

What if you mail a Christmas card or a printed newsletter to all of your partners.  Would you just categorize that as postage?  Or would it be under partner development (our term for fundraising)?  As a non-profit that is required to do functional expense reporting, we need to categorize that as a fundraising expense, not just as postage.  In the most general sense, you can use the broad question:  which part of fulfilling our mission does this expense meet (management, fundraising, or programs)?

The vast majority of your expenses as a Global Worker are going to fall under Program Services.  That’s because almost all of what you do is program-related.  However, there are a few categories of expense that may require some thought.  For example, probably all your work-related travel on the field will be for programs (fulfilling ministry responsibilities).  But what about while on Home Assignment?  Most of that work-related travel will be for fundraising (meeting with partners, reporting to churches, etc.).

This may sound complicated at first, but in most cases a moment of thought will reveal the correct functional category.  For instance, if you are applying for a grant to help fund your ministry, that’s obviously a fundraising expense—i.e., any costs related to securing the grant—even though it’s ultimately to serve your ministry programs.

Another pertinent example is the salaries of local employees that you pay within your ministry program.  Salaries may seem like management at first, but remember that “salaries & benefits for program staff” falls under Program Services because those personnel are directly fulfilling the program purposes; they are not doing administrative support work like “home office” staff would be.  Salaries for executives and staff that manage WorldVenture’s administrative roles would be Management and General.

For the most part, once you understand the three general functional categories, it’s pretty straightforward.  But if you do have questions, don’t hesitate to ask Finance at FinanceHelp@worldventure.com.  We’ll be happy to assist you.