How efficient are an organizations fundraising efforts? How much does a nonprofit spend on overhead costs?
One easily calculated measure of a nonprofit’s efficiency in fundraising is the ratio of fundraising expenses (Form 990, line 15) divided by public support (Form 990, line 1a). There are many opinions about the appropriate level of fundraising and factors such as size and type of organization that affect the ratio. Some economists argue that the ideal level of fundraising is reached when it costs one dollar to raise the last dollar of contributions. Other theories are more conservative. All nonprofit executives will agree, however, that it takes money to raise money. The Nonprofit Overhead Cost Study, a joint project of Urban Institute and the Center on Philanthropy at Indiana University, found a great deal of variation in what organizations consider to be fundraising expenses. Thus, we chose not to determine standards or benchmarks. However, we do provide information on common practices and pitfalls and some broad ranges for different types of organizations. Click here to review the s
