What is the difference between a program expense and an operational expense?
We define a program expense in two ways:
- 1) a direct cost associated with each program
- 2) a support cost associated with each program
For example, the parts for a home water system–like a cistern or pump–are direct costs. But those parts must be carefully selected, tested, ordered and installed. The time (% of employee’s salary) and resources (% of office use) spent on that process and on growing, documenting and sharing the program are considered a program support cost. Program expenses are covered by your donations.
Operational expenses are costs required to keep us up and running. They include things like operational salaries, fundraising expenses and other costs associated with building and maintaining the organization. Operational expenses are covered by the Water Council.