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Fact check: What is the average percentage of program expenses versus administrative costs for similar non-profit organizations in 2024?
Executive Summary
Nonprofits and advisers commonly cite program-expense benchmarks around 65–75% of total expenses (implying 25–35% for management and fundraising combined), but the reviewed materials do not report a single, empirically derived average for “similar” organizations in 2024. The available analyses emphasize benchmarks and allocation practice — including a frequently cited 65/25/10 split and a 70%+ program target — while warning that reported ratios depend heavily on accounting choices, joint-cost allocations, and sector or size differences [1] [2] [3] [4].
1. Benchmarks That Keep Showing Up — Numbers People Rely On
Multiple sources presented in the dataset converge on common benchmark ranges: many advisers recommend that nonprofits aim for roughly 65–75% of expenses to be program-related, and treat 10–25% for management/general and fundraising as typical depending on mission and scale. These benchmarks appear as guidance rather than empirical averages and surface in materials focused on accounting and performance metrics rather than cross‑sector statistical surveys [1] [2] [3]. The documents frame these ratios as targets or heuristics helpful for internal budgeting and external communications, not as fixed rules applicable to every organization.
2. The Missing 2024 “Average” — Nobody Gives a Definitive Number
None of the provided analyses claim to calculate a definitive average program‑to‑administrative ratio for 2024; instead, they repeat benchmarks and caution that averages vary by context. Several explicitly state they do not provide a specific 2024 percentage and emphasize organizational goals, proper cost allocation, and benchmarking against similar peers as more useful than a one‑size‑fits‑all metric [1] [5] [6]. The absence of a single 2024 average in these sources highlights how nonprofits’ functional expense reporting and sector heterogeneity make cross‑section averages misleading without careful peer-group definition.
3. Accounting Practices and Allocation Choices Drive Reported Ratios
Reportable program vs. administrative splits hinge on how organizations allocate joint costs, depreciation, and contractor fees, and whether fundraising costs are combined with management or reported separately. Sources warn that improper joint‑cost allocation can distort the apparent overhead and program ratios, meaning a high program percentage can sometimes reflect classification choices rather than operational efficiency [6] [4]. This accounting reality implies that comparisons across organizations require scrutiny of underlying accounting policies and consistent definitions of “program,” “management,” and “fundraising” expenses.
4. Watchdog Narratives and Potential Agendas — Overhead Myths Persist
One source investigates the “charities spend too much on overhead” myth and suggests pushback against simplistic interpretations of overhead ratios, arguing overhead is necessary for sustainability and impact [7]. This perspective can reflect a sector agenda to shift donor focus from overhead percentages to outcomes, while charity evaluators may emphasize low overhead as a proxy for efficiency. The presence of these differing emphases underlines the need to recognize stakeholder agendas: donors and watchdogs pushing low overhead narratives, and nonprofits and advisers advocating for balanced investment in capacity.
5. Sector and Scale Matter — Benchmarks Are Not Universal
The materials repeatedly note that sector (health, education, human services) and organizational size materially affect appropriate expense splits: program-heavy service providers often exceed a 70% program ratio, while organizations investing in growth, technology, or complex fundraising may report higher administrative or fundraising proportions [8] [3]. Thus, the right comparator set for any given nonprofit is its peer group—similar mission, budget size, and operating model—rather than an industry‑wide average, which these sources do not provide for 2024.
6. Practical Guidance When No Single Average Exists
Given the lack of a single 2024 average in the reviewed materials, the practical takeaway is to use benchmarks (65–75% program; 10–25% management/fundraising; or 65/25/10 splits) as starting points while performing peer‑group benchmarking and confirming accounting treatments. Organizations should disclose allocation methods, review joint‑cost policies, and compare against recent sector surveys or audited peers for a more defensible position when reporting to donors or regulators [1] [2] [4].
7. What Further Evidence Would Resolve the Question?
To produce a defensible 2024 average for “similar” nonprofits requires a defined peer set and a data source that aggregates audited financials for that cohort; none of the provided documents attempt that statistical exercise. The existing materials supply authoritative guidance, accounting caveats, and benchmark ranges across 2024–2026 publications, but the dataset lacks a dedicated cross‑organization survey reporting a 2024 mean or median program percentage for specified comparators [5] [8] [9]. Commissioning or consulting a sector benchmarking report that lists sample frame, methodology, and dates is the next step to obtain an actual 2024 average for a given peer group.