According to an analysis of IRS Form 990 statistics for 209,755 nonprofits, 87% of funding was spent on program expenses, 12% on Management and general expenses, and 1% on fundraising. At Financing Solutions, a leading provider of business loans for nonprofits in the form of a 501c3/not-for-profit line of credit, we offer a straightforward 2-minute application that requires no documents to receive an offer letter. Our line of credit ensures that you have a constant cash flow for the smooth operation of your nonprofit. Most often, it’s difficult for numerous nonprofits to keep pace with a specific payment schedule while compensating their employees due to a lack of financial flexibility leading to high employee turnover within the sector. However, a nonprofit line of credit and a cash reserve have proved to be perfect financial solutions to this problem. In other words, it’s an estimate of how much money you’ll make and spend over a certain period of time, such as a month or year.
- This total should not go over 35%, the cap recommended by the Better Business Bureau here in the U.S.
- Over 2025, we hope to attend to the financial facilitators of these values in nonprofit practice.
- Organization size, location, and sector all greatly affect CEO compensation.
- Employees can look up just about anything online, including “real-time” data, and believe that the organization’s pay policies and practices are not keeping up with the market.
- Nonprofits are still responsible for the employer’s share of FICA withholdings.
- From our survey late last year, we learned that many of our community members have active workforce concerns.
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This report was designed to be a resource for all nonprofits, so we made downloadable versions of many of the charts and images. We encourage you to use and share this information with others (with attribution). Click on https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ any of the graphics below to download an image you can use in presentations or on social media.
Financial insights to keep you focused on the money matters.
Regularly reviewing your budget helps your organization detect and address issues early on, make well-informed financial decisions, and build trust with stakeholders by reporting on your findings. Stuart Wales, MS, SHRM-CP, PHR, CCP, is an HR technology advocate, working with clients to leverage solutions that align not only with their current needs but also their strategic needs for the future. Use Candid’s free dashboards to learn how billions in grant dollars flow in the U.S., and compare foundation funding by state with data on foundation grants given and received by nonprofits in each state.
How much should a nonprofit pay its employees?
While I’ve shared industry norms as benchmarks for each of the previous nonprofit ratios in this series, this particular ratio does not carry such an obvious or widely recognized industry norm. When we look at an organization’s personnel expense ratio, comparing and interpreting this number can be much more nuanced, because this ratio really could look very different even from one healthy nonprofit to another. An operating, or operational, budget outlines the funds you need to make your business run efficiently and successfully during a period. It consists of all revenues and expenses your company expects to use for its operations.
Nonprofits are still responsible for the employer’s share of FICA withholdings. No, there is no legal requirement to keep a nonprofit executive’s salary below a specific threshold. However, it is necessary to be sure the compensation is commensurate with the role, organization size, and in comparison with the marketplace. The Better Business Bureau Standards for Charity Accountability state that nonprofits should spend at least 65% of their total expenses on program activities and no more than 35% of related contributions on fundraising.
