Efficiency Score
NonprofitTruth's proprietary 0-100 rating (graded A-F) measuring how effectively a nonprofit uses its resources.
Efficiency Score is a term from U.S. nonprofit financial reporting — typically a line item or schedule on IRS Form 990, the annual disclosure tax-exempt organizations file. The definition here is the IRS-file usage, which can differ from how the term is used in general financial writing or accounting standards. On the LakeQuality nonprofit efficiency rubric, Efficiency Score feeds into one of the four scoring factors (program ratio, revenue growth, reserves, or CEO compensation). Understanding how the term is computed at IRS is part of reading nonprofit pages defensibly.
Each nonprofit page on the site surfaces the specific Efficiency Score value for that organization (when Form 990 reports one), so the general definition here translates into a concrete data point on the per-nonprofit pages you actually use.
The Efficiency Score is NonprofitTruth's proprietary composite metric that rates nonprofits on a scale of 0 to 100 and assigns a letter grade from A (most efficient) to F (least efficient). The score combines four weighted factors drawn from IRS Form 990 data. Program spending ratio (40% weight) measures what percentage of total expenses goes directly to charitable programs, the higher the better. Administrative cost ratio (25% weight) evaluates overhead spending relative to total budget, with lower administrative percentages earning higher scores. Revenue growth (20% weight) tracks year-over-year revenue trends to assess organizational sustainability and momentum. Reserve ratio (15% weight) examines net assets relative to annual expenses to determine whether the organization maintains a prudent financial cushion, organizations with 3 to 18 months of reserves score highest, as too little indicates fragility and too much suggests hoarding. Letter grades map to score ranges: A (80-100), B (65-79), C (50-64), D (35-49), and F (below 35). The Efficiency Score is designed to give donors a quick, data-driven snapshot of organizational health, but it should be considered alongside qualitative factors like mission impact, program outcomes, and organizational context that financial data alone cannot capture. Full methodology details are available on the NonprofitTruth methodology page.