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How Much Should A Charity Spend on Programs?

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Although each charity is unique in its cost allocation and not limited legally, the Council's standard "Use of Funds" recommends that charities spend at least 65% of their total annual expenses on their stated programs, and not more than 35% on administration and fundraising combined.

Donors have a right to expect that most of their gifts will be used for the cause to which they are donating. Yet charities that judiciously spend money on administrative and fundraising costs, e.g. to build organizational infrastructure or to cultivate donors, ultimately improve their ability to further mission. Thus a higher or lower percentage spent on programs does not necessarily mean a charity is "better" or "worse," for a number of reasons.

While financial issues are important, the Council encourages donors to think about more than just the use of funds ratio or employee salaries. Other important questions to ask include:

  • Is this a mission I am personally committed to supporting?
  • Do I feel this charity’s accomplishments are significant?
  • Are the charity’s priorities my priorities?
  • Does this charity work to raise public awareness about a cause I feel strongly about?