Asked by: Suelen Mesner
business and finance non profit organizations

What is program ratio?

Last Updated: 5th March, 2020

The program ratio measures the relationship between program expenses (funds a nonprofit devotes to its direct mission-related work) and the organization's total expenses. Over time, organizations should strive to achieve ever-higher program ratios, devoting as many of their resources to "program activity" as possible.

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Also to know is, what is the program expense ratio?

Program expense ratio The program expense ratio provides information on how much of an organization's expenses are being spent on programs versus supporting services, such as management, general or fundraising expenses.

Secondly, what is a good current ratio for a nonprofit? Current ratio measures the ability to pay off short-term obligations. To calculate the current ratio, divide current assets by current liabilities. It is always good to be in the positive, but a truly good ratio is 2-to-1, which means that you have twice as much in current assets as current obligations (liabilities).

Likewise, what is a good program effectiveness ratio?

Generally, a PRR of three to six months on average is a reasonable number. Of course, the higher the ratio, the better. Organizations with less than three months of reserve must consider focusing on strategies to build the expendable net assets or reduction of expenses for better financial strength.

What is a good percentage for charity?

Charities that are A-rated generally spend at least 75 percent or more on their programs, so more of your money goes to causes you want to support,” says Stephanie Kalivas, analyst at CharityWatch.

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