What it costs charities to raise a dollar
A common question is how much a charity spends to raise each dollar it receives. On Form 990 that's fundraising expenses (Part IX, line 25, column D) divided by contributions and grants (Part VIII, line 1h). The median across covered charities that received at least $250,000 in contributions is $0.01 per dollar.
What counts as fundraising expense
Staff time spent on fundraising, direct mail, events, donor databases, and fees paid to professional fundraisers (line 11e), as allocated by the organization. Joint costs (a mailing that both educates and asks for money) can be split between program and fundraising under accounting rules; Part IX, line 26 says whether a charity did so.
Why the ratio moves
- Contributions include government grants, which usually cost little to raise, so organizations funded mainly by grants show low ratios.
- Acquiring new donors costs more than renewing existing ones, so a charity growing its donor base can show a higher ratio for a while.
- A large one-time gift (a bequest, a major gift) lowers the ratio for that year.
Professional fundraisers
Part IV, line 18 asks whether the charity paid professional fundraisers more than $15,000, and Schedule G lists them with what they raised and what they kept. Part VII, Section B shows the largest outside contractors, which often include direct-mail and telemarketing firms. Each charity page here lists its largest contractors when they are businesses.