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NFP Entities Joint Cost Allocation

Over the past few years, some of the largest charity raters in the United States have taken the position that they will disregard joint costs as program expense and will include those costs as 100% fundraising expense when calculating ratings for NFP entities. However, FASB Accounting Standards Codification (FASB ASC) Topic 958, Not-for-Profit Entities, and more specifically FASB ASC 958-720-45, stipulates that NFP entities allocate joint costs from combined educational campaigns and fundraising solicitations as program costs.