Resource / Financial Ratios
7 critical ratios that reveal your nonprofit's financial health, sustainability, and program efficiency — with industry benchmarks included. The ratios we check first when we review a nonprofit’s books.
If a nonprofit spends $75,000 on programs and $100,000 in total expenses:
75,000 ÷ 100,000 = 75%
A 75% ratio means 75 cents of every dollar is spent on programs.
Benchmark: Generally, 75% or higher is considered good.
If a nonprofit has $150,000 in reserves and $600,000 in annual expenses:
150,000 ÷ 600,000 = 0.25
That means 3 months of reserves (0.25 × 12 months).
Benchmark: Nonprofits should have at least 3-6 months of reserves to handle unexpected challenges.
If a nonprofit has $50,000 in current assets and $25,000 in current liabilities:
50,000 ÷ 25,000=2.0
That means the nonprofit has $2 in assets for every $1 in liabilities, indicating strong financial health.
Benchmark: A ratio of 1.0 or higher is recommended.
Total Revenue: $500,000
Total Expenses: $475,000
(500,000−475,000) ÷ 500,000 = 0.05.
That means the nonprofit has a 5% operating margin, meaning 5 cents of every $1 earned remains after covering expenses.
Benchmark:
Above 5% → Healthy, provides a cushion for growth and reserves.
Between 1% and 5% → Manageable, but leaves little room for financial flexibility.
Below 1% or Negative → Risky, may indicate financial instability or reliance on external funding to stay operational.
If a nonprofit raises $400,000 and spends $100,000 on fundraising:
400,000 ÷ 100,000 = 4
That means $4 was raised for every $1 spent on fundraising.
Benchmark: A nonprofit should aim for at least a 3:1 or 4:1 ratio.
If a nonprofit spends $50,000 on fundraising and raises $200,000:
50,000 ÷ 200,000=0.25
That means it costs $0.25 to raise $1.
Benchmark: Under $0.25 per dollar raised is strong. Anything over $0.50 is a red flag.
If 500 donors gave last year, and 250 donated again this year:
(250 ÷ 500) x 100 = 50%
That means a 50% donor retention rate.
Benchmark: A 50%+ donor retention rate is a sign of strong relationships with supporters.
Before you act on a number
A ratio tells you which question to ask, not what to do about it. These go one level deeper on the numbers this calculator produces.
Which number answers which question
The five moments each ratio actually earns its keep, what the published benchmarks really say, and when a ratio will mislead you.
Where these inputs come from
Reading the statement of financial position and statement of activities, so you can source every figure above in about ten minutes.
How many months of cash you actually need
Why the three-to-six-month range is a starting point rather than a target, and what changes it for your organization.
Why your program expense ratio is really a bookkeeping question
The ratio is a product of how expenses are coded and allocated month to month, which is where it gets fixed.
GivingArc combines CPA oversight with proprietary monthly close workflows. Transparent pricing, audit-ready books, and on-time 990s — every month, every nonprofit.
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