Fundraising Ratio
The percentage of a nonprofit's total expenses devoted to soliciting donations and contributions.
Fundraising Ratio 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, Fundraising Ratio 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 Fundraising Ratio 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 fundraising ratio (also called fundraising efficiency or cost to raise a dollar) measures what percentage of a nonprofit's total spending goes toward soliciting contributions, grants, and other support. This metric is calculated from the fundraising expense column on Form 990 Part IX (Statement of Functional Expenses). A lower fundraising ratio is generally better, indicating that the organization spends less on solicitation relative to its total operations. Industry benchmarks suggest that fundraising expenses should typically represent no more than 15-20% of total expenses for a well-established organization, though younger organizations or those launching major capital campaigns may temporarily spend more. The BBB Wise Giving Alliance recommends that fundraising expenses should not exceed 35% of total contributions. A related metric, the cost to raise a dollar, divides total fundraising expenses by total contributions received, if a nonprofit spends $0.25 to raise each dollar, its fundraising efficiency is considered strong. However, fundraising costs vary significantly by method: events and direct mail tend to be expensive, while online giving and major donor cultivation can be more efficient. Some organizations classify joint costs (activities that combine fundraising appeals with educational content) partly as program expenses, which can artificially lower the reported fundraising ratio. NonprofitTruth's Efficiency Score considers fundraising costs indirectly through the administrative overhead factor, which captures all non-program spending.