The principal characteristic of an Internal Service Fund is to:

The principal characteristic of an Internal Service Fund is to facilitate services between governmental departments on a cost-reimbursement basis. Internal Service Funds are typically established to centralize certain services that are provided to other parts of the government, allowing departments to save money through economies of scale and more efficient service delivery. This structure helps ensure that the costs of services are fairly allocated among the departments that utilize them.

By charging fees to the user departments based on the actual cost of the services provided, the Internal Service Fund promotes accountability and efficiency, ensuring that each department pays a fair share of the overall costs incurred in providing those services. This cost-reimbursement model supports the principle of transparency in government budgeting and financial reporting.

The other options do not accurately reflect the primary function of Internal Service Funds; they focus more on external service delivery, profit generation, or investment in infrastructure rather than the specific inter-departmental services that the Internal Service Funds are designed to provide.