Cost of Fundraising Ratio
Fundraising expenditure as a percentage of total fundraising income, indicating cost efficiency
What is Cost of Fundraising Ratio?
Cost of fundraising ratio is the amount a charity spends on fundraising for every unit of income it raises, shown as a percentage. It shows how efficiently fundraising activity turns spending into income.
Donors and regulators look at it, though it must be read with care, since some valuable activities pay back over years.
How this KPI is measured
- Function
- Fundraising & Income
- Sub-function
- Campaign Performance
- Industry
- Not-for-Profit / Charity
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Quarterly / Annual
- Formula
- (Total fundraising costs / Total fundraising income) × 100
How to calculate it
Divide total fundraising costs by total fundraising income, and multiply by 100.
For example, if a charity spent 250,000 to raise 1,000,000, the ratio is 25%, meaning 25 pence in every pound goes on raising it.
Look at the ratio by channel, since costs vary widely between, for example, regular giving, events and legacy work, and consider a multi-year view for investments that pay back slowly.
Where it is used
Judging fundraising efficiency
See how much it costs to raise income.
Comparing channels
Find efficient and costly activities.
Reporting to trustees and the public
Show stewardship.
How to improve it
Tips and common mistakes
- A very low ratio may mean under-investment in fundraising.
- Do not judge new activities on year-one ratios.
- Allocate costs consistently.
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