Nonprofit Efficiency Ratio
Program ratio, cost to raise $1, operating reserves, and grant readiness, with what funders are likely to question.
Example scenario—not a forecast or verified benchmark. Enable JavaScript to edit inputs, view charts, save locally and export your analysis.
Example inputs
- Individual and corporate contributions
- 900,000
- Foundation and government grants
- 800,000
- Earned / program service revenue
- 300,000
- Program services expense
- 1,480,000
- Management & general expense
- 290,000
- Fundraising expense
- 190,000
- Unrestricted net assets available for operations
- 330,000
- Share of revenue from your largest funder
- 22
- We have a current independent audit or review
- true
- We track program outcomes, not just outputs
- false
- Target program expense ratio
- 75
- Target cost to raise $1
- 0.2
- Target operating reserve
- 3
Example results
76% of spending goes to programs, it costs $0.11 to raise $1, and reserves cover 2 months: grant readiness 71/100, with 2 gaps funders may flag.
- Program expense ratio
- 75.5%
- Cost to raise $1
- $0.11
- Grant readiness score
- 71/100
- Operating reserve
- 2 mo
- Management & general ratio
- 14.8%
- Fundraising ratio
- 9.7%
- Operating surplus (deficit)
- $40,000
What stands out
75.5% of spending goes to programs
That clears your 75% benchmark. Admin is 14.8% and fundraising 9.7%.
It costs $0.11 to raise $1
Fundraising is efficient. There may be room to invest more in it.
2 months of operating reserves
Target is 3 months ($490,000). A delayed grant payment could force cuts.
Next actions
- Adopt a board-approved reserve policy and budget a $53,333 annual surplus to reach 3 months in 3 years.
- Define 3–5 outcome metrics per program and report them in every grant application; outcome data is increasingly expected by funders.
- Publish a one-page financial dashboard for the board each quarter with these ratios.
Model assumptions & limitations
- Ratios use the three functional expense categories reported on IRS Form 990 Part IX.
- Cost to raise $1 = fundraising expense / contributions and grants; earned revenue is excluded.
- Program ratio, cost-to-raise, reserve, and 25% concentration thresholds are common rules of thumb used by evaluators and funders, not universal standards. Adjust to your funders' expectations.
- Reserves use unrestricted, liquid net assets divided by average monthly operating expenses.