Funding for Morale, Welfare and Recreation programs and services is based on three categories: mission sustaining, community support and revenue generating. Each category supports military readiness by providing community, service member and family support services. Programs within these categories are funded by Congress through appropriated funds, nonappropriated funds or a combination of the two.

Category A: Mission Sustaining Programs

Category A programs and services are considered the most essential in meeting the organizational objectives of the services. The programs should be supported almost entirely with appropriated funds. Programs within this category promote the physical and mental well-being of the military member, thereby supporting the basic military mission. Examples of Category A Morale, Welfare and Recreation programs include: physical fitness and aquatics, library programs, on-installation parks and picnic areas, basic social recreation programs, shipboard, company and/or unit level programs and sports and athletics (self-directed, unit level, intramural).

Category B: Community Support Programs

Category B programs and services are designed to provide service members and families with community support systems. These programs are funded through a mix of appropriated and nonappropriated funds but should primarily be funded through appropriated funds. Examples of Category B Morale, Welfare and Recreation programs and services include child development programs, youth activities, outdoor recreation, arts and crafts skill development, automotive and crafts skills development and sports programs above the intramural level.

Category C: Revenue Generating Programs

Category C programs and services generate sufficient income to provide for a majority of their operating expenses though they are authorized limited appropriated fund support. Examples of Category C Morale, Welfare and Recreation programs and services include golf courses, clubs, bowling centers, recreational lodging and boating activities. Revenue generating programs at designated Morale, Welfare and Recreation remote and isolated locations may receive the same type of appropriated fund support as Category B programs.