U.S. Nonprofit Program Expense Ratio:
2024 Benchmarks

The program expense ratio measures the percentage of a nonprofit's total functional expenses that go directly to program services — the activities that further its charitable mission. It is calculated by dividing total program service expenses by total functional expenses as reported on IRS Form 990, Part IX. The remaining expenses are split between management/general (administrative) costs and fundraising costs.

The median U.S. nonprofit allocates 88.6% of its spending to programs, with the mean at 81.2%. The gap between median and mean reflects a long tail of organizations with lower program ratios — often newer organizations, grantmakers, or those in startup phases where administrative and fundraising costs consume a larger share.

Small nonprofits (under $1M in revenue) report a median program expense ratio of 90.0%, the highest of any budget tier. This is partly because many small organizations are volunteer-run and have minimal administrative infrastructure — nearly all spending goes directly to programs. However, the wide interquartile range (72.1% to 99.6%) shows enormous variation within this group.

Mid-size organizations ($1M–$10M) have the lowest median ratios at 85.1%, reflecting the costs of professionalizing operations — hiring dedicated staff, investing in fundraising, and building administrative systems. At the $25M+ tier, the median rises back to 88.0% as economies of scale allow large organizations to spread overhead costs across larger program budgets.

Recreation & sports nonprofits have the highest median program expense ratio at 95.1%, followed by public safety at 94.1%. These sectors are characterized by direct service delivery — running youth leagues, maintaining parks, operating fire departments — where most spending is inherently programmatic.

At the other end, civil rights organizations (82.2%) and environment groups (83.6%) have lower program ratios. These sectors often rely heavily on fundraising, public education campaigns, and policy advocacy, all of which require significant investment in communications, legal work, and donor relations that fall outside program expenses.

Iowa leads all states with a median program expense ratio of 92.8%, followed by Utah (92.3%) and Alabama (92.1%). Midwestern and Southern states generally have higher ratios, reflecting a mix of factors: lower cost of living reduces administrative expenses, and these states have proportionally more direct service organizations like food banks, churches, and community groups.

Washington D.C. has the lowest median at 82.6%, driven by the concentration of national advocacy organizations, trade associations, and grantmaking foundations that by nature have higher administrative and fundraising costs. Northeastern states like Massachusetts (85.6%) and New York (87.3%) also fall below the national median, partly due to higher personnel costs.

On Form 990 Part IX, nonprofits allocate all functional expenses into three categories: program services, management and general (administrative), and fundraising. Among 173,678 organizations that report a non-zero administrative expense ratio, the median admin ratio is 12.9% (25th percentile: 6.0%, 75th percentile: 23.7%). Many smaller nonprofits do not separately report fundraising expenses, so the primary split for most organizations is between program and administrative costs.