Last month, we posted an article about the Benefits of Sharing Expenses by Nancy Church, CPA, which illustrates how to establish a methodology to allocate expenses. We have developed a fairly simple model on an Excel spreadsheet that illustrates the methodology and accounting for allocating expenses from a ‘pool’ to programs or functions and grants in a nonprofit organization. There are many ways to ‘skin this cat’. We have kept it simple as most nonprofits don’t have the software tools to make the process more complex which in most cases is not needed. One tenant that we strongly recommend is always using a special distribution account so the before-allocation values for a particular program or grant are preserved. For management reporting purposes the special distribution account can be filtered out. Take a look at the example worksheet and use it as you like, and don’t hesitate to add your comments and ideas to the blog.