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Demystifying Internal Service Funds

What is an Internal Service Fund (ISF)?

  • A fund created by governments to allocate the cost of certain shared activities, facilitating the use of multiple funding sources in addition to the General Fund.
  • A fund created by governments to bill back individual departments, on a cost reimbursement basis, for any activity that provides goods and services to multiple
  • departments.
  • Internal Service Funds are appropriate only for activities that are intended to operate on a break-even basis over time.
  • Using an Internal Service Fund to allocate costs or bill backs to departments provides a more complete picture of the true cost of operating a department and its programs.

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