Which revenue sources are typical for internal service funds?

Internal service funds are designed to provide goods and services to other departments or segments within the same governmental entity, rather than to external customers. The typical revenue sources for these funds would include operating revenues generated from the services provided internally. However, it is also common for internal service funds to receive restricted grant revenues which can be used to cover specific costs related to their operations or projects. Additionally, interest earnings from fund investments can contribute to the overall revenue of these internal service funds.

The presence of restricted grant revenues and interest earnings highlights the diverse financial strategies that can support an internal service fund, enhancing its ability to function effectively and sustainably within the larger governmental framework. By capturing both operating revenues from the services provided and non-operating revenues such as grants and interest, internal service funds can ensure they have adequate resources to meet their operational needs and contribute to the overall financial health of the organization.