Nonprofit ratios: considering your fundraising efficiency  

What is the fundraising efficiency ratio? 

Fundraising efficiency ratio is the number that shows how much it costs your nonprofit organization to raise funds. Think of it as a “cost-to-raise” meter. If you spend 0.50 cents to raise 1 dollar, you’re absolutely killing it! That means you’re super-efficient—more money is going toward your cause, not just covering costs. 

The lower the ratio, the better.  

Higher numbers? That’s your fundraising strategy showing off how efficient it is. (But watch out—if it’s too high, it might mean you’re spending too much to get those donations.) 

Why does the fundraising efficiency ratio matter? 

• Donor love: Donors want to know their money’s making a real impact. A low ratio screams, “We’re smart with your cash!” 

• Sustainability: A high ratio might mean you’re spending too much to raise funds. Not cool for long-term survival. 

• Benchmarking: Compare your ratio to similar organizations. It’s like a friendly competition to see who’s best at fundraising efforts. 

Who’s watching? 

Big names like Guidestar and Charity Navigator use this ratio to rate nonprofits. So yeah, it’s kind of a big deal. 

Why should you care? 

• It’s your report card for fundraising success. 

• It builds trust with donors—transparency is basic! 

• It helps you level up by catching where you can improve. 

Bottom line? Nail this ratio, and you’re not just raising funds—you’re building confidence, sustainability, and a rock-solid reputation. 

How to calculate your fundraising efficiency ratio?  

Just divide your total donated income by your total fundraising expenses. Boom—you’ve got your ratio.

What should your number look like? 

Your fundraising efficiency ratio should be greater than 1. Here’s the breakdown: 

• A ratio of  1  means you’re breaking even—spending  $1 to raise $1. Not bad, but we can do better! 

• Anything  above 1? That’s the sweet spot! It means you’re raising  more  than you’re spending.  

• The  higher  the number, the more efficient your fundraising programs are. Think of it as your fundraising superpower level! 

One size doesn’t fit all 

Important note: what’s considered a “good” ratio can vary depending on your sector. 

• Schools, hospitals, and environmental groups might have different benchmarks. 

• It’s all about understanding your specific context and industry standards. 

Tools for measuring efficiency ratio 

Want to make this easy? There are tons of tools and software out there to help you measure your ratio like a pro. They track everything—fundraising expenses, donations, and more—so you can calculate and monitor your ratio without breaking a sweat. 

1. Donor management software 

2. Financial management software 

3. Fundraising analytics platforms 

4. Automation and AI tools 

5. Integrated fundraising platforms 

Calculating your donor efficiency ratio is important, but here’s the real secret sauce:  how you communicate what you’re doing and why it matters. That’s where the magic happens! 

Small, specialized groups often have higher cost ratios than big national or international charities—and that’s okay! It’s all about context. 
👉Pro tip: Look at the trend over time. If you invest in something like marketing or hiring a specialist advisor (think estate planning), the payoff might take years. But guess what? That’s an investment in your future. 

A fundraising efficiency ratio example 

Imagine you run a local animal shelter. You spend  $5,000 on a fundraising gala and raise $20,000. To find your efficiency ratio, divide what you raised by what you spent:  20,000÷5,000 = 4 
Your ratio is  4, meaning you raised  4 for every 1 spent. That’s a home run! 

Now, let’s say you spend the same $5,000 but only raise $7,000: 7,000÷5,000 = 1.4 
This time, you’re raising  $1.40 for every $1 spent. Not terrible, but there’s room to grow. Maybe it’s time to rethink the gala and try online events or a new fundraising idea! 

Analyzing fundraiser success  

What’s a good fundraising efficiency ratio? Industry benchmarks for fundraising ratio:

• Top-tier nonprofits: Spend 10-25 cents per $1 raised (it costs 10 to 20 cents to raise $1). This is a fundraising ratio of 10%-25%.  

• Super-efficient organizations: Spend less than $0.10 per $1 raised—that’s a 10:1 (or   10: 90) efficiency ratio!  

• Average nonprofits: Between  0.20 and 0.35 (it costs 20 to 35 cents to raise $1). This is a 25%–35% fundraising ratio. A common standard suggests that nonprofits should spend no more than $0.35 to raise each dollar, which is a 65/35 program spending ratio   

• Concerning: Above 0.35 (it costs more than 35 cents to raise $1). 

• Startups/new nonprofits: Often higher (35%–50%) due to initial donor acquisition costs.  

• High-Reliance on events: Fundraising ratios can exceed 40% for event-heavy nonprofits.  

👉Bottom line? Keep your ratio low and your ROI high!   

Summary of fundraising efficiency ratio: what does it mean for your nonprofit?  

• Low Ratio (Under 20%) – More money going straight to your mission! Highly efficient fundraising.  

• Moderate Ratio (20%-35%) – The sweet spot for many nonprofits. A solid balance between investment and revenue.  

• High Ratio (35%-40%+) – Red flag! This could mean high costs, inefficiency, or a need for a new strategy.  

👉 Keep in mind: These are general benchmarks. Your ideal ratio depends on your nonprofit’s size, mission, and strategy.  

Sources supporting the $0.20 ratio (20:80 rule) 

Source	Recommended Ratio	Key Insight
Charity Navigator	$0.20 or less (20:80)	Top nonprofits spend 10-20% on fundraising.
BBB Wise Giving Alliance	$0.20 or less (20:80)	Spending no more than 35% on fundraising is acceptable, but lower is better.
GuideStar (Candid)	$0.20 or less (20:80)	Efficient nonprofits spend 10-20% on fundraising.
Independent Sector	$0.20 or less (20:80)	Best practices advocate for fundraising costs below 20%.
Nonprofit Finance Fund (NFF)	$0.20 or less (20:80)	Lower fundraising costs support long-term sustainability.
Academic Research	$0.20 or less (20:80)	Studies show that lower ratios correlate with donor trust and retention.
Donor Surveys	$0.20 or less (20:80)	Donors prefer nonprofits with fundraising costs below 20%.

This translates to a ratio of 20:80 or better (spending 0.20 to raise 0.80, or earning 0.80, or earning 4 for every $1 spent). 

Takeaway? 

The $0.20 or less fundraising efficiency ratio  is widely supported by leading nonprofit evaluators, industry benchmarks, academic research, and donor preferences. 

How fundraising ratio impacts ROI  

• Lower ratio = higher ROI. You’re raising more while spending less. Win-win!  

• Higher ratio = lower ROI. High costs eat into revenue, making growth harder.  

Factors influencing the fundraising efficiency ratio 

1. Fundraising methods: 

• Direct mail campaigns, events, and telemarketing tend to have higher costs. 

• Online fundraising (email, social media, crowdfunding) is often more cost-effective. 

2. Organization size: 

• Smaller nonprofits may have higher ratios initially due to fixed costs (e.g., hiring staff, setting up systems). 

• Larger nonprofits often benefit from economies of scale, leading to lower ratios. 

3. Donor base: 

• Acquiring new donors is typically more expensive than retaining existing ones. 

• A strong focus on donor retention can improve efficiency over time. 

4. Mission and cause: 

• Some causes (e.g., disaster relief) may attract donations more easily, reducing costs. 

• Less popular or niche causes may require more effort and resources to raise funds. 

Why your fundraising efficiency ratio might be struggling 

Sometimes, your fundraising efficiency ratio isn’t where you want it to be. Here are the usual suspects: 

1. Sky-high fundraising costs: Spending too much to raise too little. Ouch. 

2. Ineffective strategies: If your plan isn’t working, it’s time to switch it up! 

3. Donor disengagement: If donors aren’t excited, they’re not giving. Time to spark that connection! 

4. Resource mismanagement: Are you using your time, money, and people wisely? Discover new ways to increase your earned income. 

5. Lack of diversification: Relying on just one fundraising method is risky. Mix it up! 

How should you use the fundraising efficiency ratio? 

This metric is your advantage! Here’s how to use it: 

• Big picture: Calculate the ratio for all your fundraising activities over a year or specific period. 

• Event deep dive: Use it to measure the success of a single event, campaign, or program. 

• Spot trends: Track it over time to see if you’re improving or need to pivot. 

Examples of good fundraising efficiency ratio  

Let’s look at a few real-world examples of nonprofits with impressive fundraising efficiency ratios:  

1. Charity: Water  

Fundraising efficiency ratio: 0.11 (they spend just 11 cents to raise $1) 

Why they’re awesome: Transparency, low overhead, and innovative fundraising methods. Charity Navigator gives them a perfect score for efficiency. 

2. Direct Relief  

Fundraising efficiency ratio: of $0.00 (they spend nothing to raise $1 in charitable contributions). Off-the-charts amazing! 

Why they’re awesome: Strategic partnerships and smart resource management. Charity Navigator rates them 100% for impact and transparency. 

3. The Against Malaria Foundation  

Fundraising efficiency ratio: 0.00 (yes, you read that right—they spend nothing to raise $1!). 

Why they’re awesome: Laser focus on cost-effectiveness and transparency. Donations go straight to programs, not overhead. 

Tips for improving your fundraising efficiency ratio 

Ready to level up? Here’s your game plan: 

1. Get into technology 

• Use affordable digital tools for outreach and donor management software to automate admin tasks, track donations, and get insights into donor behavior. 

• Ditch the high-cost methods (looking at you, direct mail, and fancy events) and go digital! 

2. Emphasis on high-yield strategies that deliver big results! Think: 

• Major gift campaigns: Go big with targeted asks to your top supporters. 

• Corporate sponsorships: Partner with businesses that align with your mission. 

• Online fundraising initiatives: Harness the power of social media, email, and crowdfunding to reach more donors. 

These strategies pack a punch and deliver serious ROI.  

3. Focus on donor retention 

• Keep your existing donors happy—it’s way cheaper than finding new ones. 

• Use donor management software to track and engage your supporters.  

4. Diversify your fundraising strategies 

• Mix low-cost methods (like online campaigns) with higher-cost ones (like events) to balance efficiency and reach. 

• Explore grants or recurring donation programs. Variety is the spice of fundraising! 

5. Track and analyze 

• Adjust your strategies to get the best bang for your buck. 

• Review your progress quarterly or annually. 

• Data is your best friend—use it to make smarter decisions! 

6. Collaborate and share resources 

• Partner with other organizations to reduce costs. Teamwork makes the dream work! 

• Use volunteers for fundraising activities. They’re passionate, dedicated, and cost-effective. 

The fundraising efficiency ratio isn’t the whole story 

Yes, the fundraising efficiency ratio is a star player, but it’s not the  only  player on the team! Don’t forget to track other key metrics (link to other articles on the fundraising metric subject): 

• Donor retention rates: Keeping donors happy is cheaper than finding new ones! 

• Campaign impact: Are your efforts actually making a difference? 

• Overall financial health: A strong bottom line keeps your mission alive. 

Relying only on the efficiency ratio is like reading one chapter of a book—you’ll miss the full story! 

How nonprofits maximize their fundraising efficiency ratio with RallyUp  

Ready to become a fundraising high performer? Meet RallyUp! 

Fundraising just got a whole lot easier. RallyUp is your new go-to for efficiency and success. Our innovative platform helps nonprofits like yours build killer fundraising efficiency ratios and deliver impressive ROIs. 

Why RallyUp rocks? 

1. Fundraise for FREE: Yep, you read that right! RallyUp lets you run multiple fundraising activities—like Raffles, Auctions, Sweepstakes, A-Thons, and Crowdfunding campaigns—without upfront costs or long-term contracts. It’s a risk-free way to optimize your efforts. 

2. User-friendly tools: RallyUp’s platform is packed with easy-to-use features that make organizing engaging fundraisers a snap. 

3. Maximize your impact: From small online campaigns to big events, RallyUp helps you attract new donors, diversify your strategies, and get the best return on investment. 

Start tracking the fundraising efficiency ratio with RallyUp 

For more on fundraising metrics, KPIs, and everything you need to know to run a successful fundraiser, visit our library of blogs!

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