# Charity Program Spending Percentages

#### How to Calculate a Charity Program Spending Percentage

Divide the amount the charity spent on programs by the total amount it spent, and multiply the result by 100.

For example: If an organization reports spending \$750,000 on programs while spending a total of \$1,000,000, dividing \$750,000 by \$1,000,000 produces the decimal number 0.75, and multiplying that by 100 produces the result of 75% (its program spending percentage).

#### Why Calculate the Percentage?

We believe the spending on programs percentage is an indicator of the focus and management approach of an organization.

Caveats: Program spending percentages should not be used standing alone. They are part of an overall evaluation of a charity and its performance. A charity spending an apparently suitable percentage on programs, where the programs themselves accomplish little, is by no means an effective charity.

See the “Money and Ratios” tab of a charity’s SGO report for its spending on programs percentage. Find-a-Charity. Sponsor data entry for a charity.

#### What are Appropriate Percentages?

In our view,

• a percentage between 60% and 80% is appropriate (green zone),
• a percentage above 80% or below 60% (but not below 50%) might be reasonable in an organization’s specific circumstances, but should be discussed directly with and satisfactorily explained by the organization’s management before a donation is made (yellow zone), and
• a percentage below 50% (red zone) means the organization failed to meet our screening standard.

#### Program Spending Above 80%?

At times we’re asked why a program spending percentage above 80% should be discussed with the organization. If an organization reports spending more than 80% on programs, that means it is spending less than 20% on administration and fundraising. While an organization might be proud of minimizing administrative and fundraising costs, we believe that well-run organizations must spend meaningful resources on administration and fundraising. So, we suggest donors investigate further to make sure that the organization is not (i) having administrative or fundraising costs paid from an outside source, (ii) underspending on important parts of its operations or (iii) mis-categorizing administration or fundraising costs as program costs.

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### 14 comments to Charity Program Spending Percentages

• Vanessa Donaldson

Hello. I am trying to find out the most current average overhead expenses for the non-profit industry.

Many Thanks,
Vanessa Donaldson

• Edward Long

Vanessa –
This isn’t exactly current, but take a look at the work the Urban Institute / National Center for Charitable Statistics did: nccsdataweb.urban.org/knowledgebase/index.php?category=40
Note that a big concern they raised about expenses for the industry was the belief that many nonprofits were under-reporting overhead.
The IRS publishes lots of information about charity functional expenses, but I’m not sure they have what you’re looking for. Take a look at this page on the IRS site: http://www.irs.gov/taxstats/charitablestats/article/0,,id=97176,00.html
If you find more recent data, please share it with the rest of us.

• I AM TRYING TO FIND OUT A SIMPLE WAY TO DETERMINE HOW MUCH AN ORGANIZATION SPENDS ON ADMINISTRATION COST & HOW MUCH IS USED FOR THE CHARITY? THANKS SANDY SALL

• Edward Long

Sandy – Please tell us more about what you are looking for.
The article above provides info on how to calculate a charity program spending percentage. Charity spending is normally allocated among three areas: programs, administrative and fundraising. The program spending percentage is the portion of total spending allocated to programs.
If you look at a Sample Report like Oxfam America’s [click here] — the Money & Ratios tab shows the calculation.
Thanks — Ed

• Gill Winnik

I am debating between giving to the “smile train” and “operation smile”
Do you have any informnation that will helpme make up my mind?
thanks

• Edward Long

Mr. Winnik — A few thoughts for you:
** “Smile Train” — we identified a group called Smile Train Inc based in New York City. Its EIN is 133661416. Here’s a link to its SGO Report: http://seriousgivers.org/report/?id=133661416
** “Operation Smile” — we identified a group called Operation Smile Inc based in Norfolk, Virginia. Its EIN is 541460147. Here’s a link to its SGO Report: http://seriousgivers.org/report/?id=541460147
As you will see from Data Entry Status discussion in each SGO Report, we havn’t yet completed data search and entry for either group.
I hope you find this helpful. — Ed (aka Serious).

• Fred Lundeen

what percentage of my donation goes to administration for Natl. Assoc. of blind veterans

• Edward Long

Mr. Lundeen —
Please provide the organization’s federal EIN (employer identification number). Will look something like: 12-3456789
Based on that information, we’ll check further for you.
Ed (aka Serious)

• During my career as a federal employee we would get, once a year, a booklet that listed many (perhaps over 100)tax-exempt organizations & provided a one paragraph blurb about what their organization did and at the end, in brackets, they showed the overhead expense as a percentage of total income. Is there anywhere I could find something like that on the internet? Thank you.

• Edward Long

Barry –
A few thoughts,
** I’m guessing that booklet was part of participation in what’s called the Combined Federal Campaign.
** If you’re looking for program, fundraising and overhead percentages — note that CharityNavigator.org includes them in its reviews (it reviews about 6,500 larger charities).
** SeriousGivers.org charity reports include program spending percentages for a bunch of charities, but that charity data research in still in the early stages.
I hope you find this helpful,
Ed (aka Serious)

• john garot

What percentage of donations are returned directly to the Disabled Veterans from the DAV organization? I’m a veteran but am hesitant to contribute for fear of a low return for the vets themselves. Please advise at your earliest convenience. .

Thanks,
John Garot

P.S. I hope this goes go through!!!

• Edward Long

John – You are wise to be cautious.
** I did a quick check for “Disabled American Veterans” using the name search at CharityCheck101.org
** There are more than 1,700 groups with Disabled American Veterans in their names.
** The best way to narrow down your search — so you can find out how much the specific organization spends on veterans — is to get and use its EIN (employer identification number). Every organization has a distinct EIN.
I hope you find this helpful.
Ed (aka Serious)

• JAMES BIGHORN

IS THERE A LIST THAT DESCRIBES HOW MUCH MONEY A CHARITY ORGANIZATION USES OR SPENDS ON ADMINISTRATION COSTS VS MONEY USED FOR THE ACTUAL CHARITY? PLEASE DON’T TELL ME TO NAME A SPECIFIC CHARITY, THAT’S NOT WHAT IAM ASKING. IF YOU DO NOT HAVE A LIST, CAN YOU DIRECT ME TO ONE THAT DESCRIBES WHAT I AM LOOKING FOR? I HAVE LEARNED THAT MOST CHARITIES, BUT NOT ALL, USES ABOUT 90% FOR ADMINSTRATIVE COSTS, OR FOR SALARIES AND, THE REST GOES TO THE ACTUAL CHARITY.

• Hi James,
At this time there is no such list (that covers all charities).
If the IRS would make charity data available in computer-readable format, it would be fairly simple to create that list. And SeriousGivers is all set up to do so.
We just need the IRS to change its approach. The results of a pending court case could move us all further.
As to your thought that most charities spend 90% on administration — I cannot believe that to be correct.
I hope that we’ll all have the list you are seeking — in the near future.
Ed