In its Form 990 or 990-EZ, a charity will report the amount it spends on programs and the total amount it spends. Its program spending percentage is calculated by dividing the amount spent on programs by the total amount spent and then (to get a percentage) multiplying 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 program spending percentage of 75%.
Why calculate this percentage? We believe the program spending percentage is an indicator of the focus and management approach of an organization.