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Nonprofit Financial Ratios: Formulas & Calculators

Use these calculators to turn numbers from your statement of financial position, statement of activities, and Form 990 into ratios you can track over time and review with your board.

  • Each needs only 2 to 5 numbers, and shows where to find them.
  • Numbers you enter carry over to the other calculators that use them, without replacing anything you typed there.
  • Nothing you enter leaves your browser.

Short on time? Start with operating margin and the program expense ratio. Both use totals from your statement of activities or Form 990.

If your statements aren't at hand, you can look up any nonprofit's filed Form 990 for free on ProPublica Nonprofit Explorer. Filed returns usually run one to two years behind. Each calculator's example numbers come from a fictional youth services nonprofit with a budget of about $2.4 million.

Reviewed by Van Haas, Founder & CEO, Accountix.

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Liquidity and Reserve Ratios

Spending Ratios

Sustainability Ratios

Revenue and Debt Ratios

Do You Have Too Much in Reserve?

Liquidity and Reserve Ratios

Months of Cash on Hand

How many months you could keep paying normal expenses from cash you can actually use if no new money arrived.

Numbers you need

Unrestricted cash and cash equivalents

Form 990, Part X, lines 1 and 2, less any restricted cash

Total expenses

Form 990, Part I, line 18 (equals Part IX, line 25, column A)

Unrestricted liquid investments (optional)

Your statement of financial position

Depreciation (optional)

Form 990, Part IX, line 22

Your result

Reference point: No fixed standard; 52% of nonprofits have 3 months or less (Nonprofit Finance Fund)

How this ratio works

Formula: (Unrestricted cash + unrestricted liquid investments) ÷ (annual expenses minus depreciation ÷ 12)

Reference point: No fixed standard. In Nonprofit Finance Fund's 2025 survey, 52% of nonprofits had three months or less of cash on hand, and 18% had one month or less.

Source: Nonprofit Finance Fund, 2025 State of the Nonprofit Sector Survey

What a weak number usually means: Cash is tied up in receivables, restricted funds, or property, reimbursements are slow, or recent deficits have drawn cash down.

Example: $350,000 ÷ $192,500 a month = 1.8 months. The monthly figure is $2,310,000 of annual expenses, excluding depreciation, divided by 12.

Definition: see days cash on hand in our nonprofit accounting glossary.

Operating Reserve Ratio

How much of a year's spending your designated reserve could cover.

Numbers you need

Total expenses

Form 990, Part I, line 18 (equals Part IX, line 25, column A)

Board-designated operating reserves (optional)

Board minutes or your financial statement notes

Net assets without donor restrictions

Form 990, Part X, line 27

Land, buildings, and equipment, net

Form 990, Part X, line 10 (net amount)

Your result

Reference point: 25% minimum, about 3 months (Nonprofit Operating Reserves Initiative)

How this ratio works

Formula: Board-designated operating reserves ÷ total annual expenses. Multiply by 12 to express it in months.

Reference point: 25% (about three months) is the minimum recommended by the Nonprofit Operating Reserves Initiative. The same source notes that 25% may not be enough for organizations with volatile revenue.

Source: Nonprofit Accounting Basics (Greater Washington Society of CPAs Educational Foundation), Operating Reserve Ratio, citing the Nonprofit Operating Reserves Initiative

What a weak number usually means: Surpluses were spent or never set aside, or the reserve was used and not rebuilt.

Example: $300,000 ÷ $2,340,000 = 12.8%, about 1.5 months, below the 25% minimum.

Note: No board-designated reserve? Leave it blank and enter net assets without donor restrictions and net fixed assets instead. The result is labeled, because definitions vary across sources.

Definition: see operating reserve in our nonprofit accounting glossary.

Months of LUNA (Liquid Unrestricted Net Assets)

How long your unrestricted, non-property resources could cover operations. It is often a more honest liquidity measure than total net assets.

Numbers you need

Net assets without donor restrictions

Form 990, Part X, line 27

Land, buildings, and equipment, net

Form 990, Part X, line 10 (net amount)

Total expenses

Form 990, Part I, line 18 (equals Part IX, line 25, column A)

Debt related to buildings and equipment (optional)

Your loan statements or Form 990, Part X, line 23 if it is all property debt

Depreciation (optional)

Form 990, Part IX, line 22

Your result

Reference point: No fixed standard; track the trend

How this ratio works

Formula: LUNA = (net assets without donor restrictions − net fixed assets) + debt related to fixed assets. Months of LUNA = LUNA ÷ monthly expenses excluding depreciation.

Reference point: No fixed standard. Track it over time. It shows unrestricted resources that are not locked up in buildings and equipment.

Source: Candid, financial trends analysis definitions (LUNA)

What a weak number usually means: Unrestricted net assets are mostly invested in property, or recent deficits have eroded them.

Example: ($760,000 − $450,000) + $200,000 = $510,000 of LUNA, ÷ $192,500 = 2.6 months.

Definition: see liquidity in our nonprofit accounting glossary.

Current Ratio

Whether the resources you expect to turn into cash within a year cover the bills due within a year.

Numbers you need

Current assets

Your statement of financial position (Form 990 does not split current and long-term)

Current liabilities

Your statement of financial position

Your result

Reference point: 1.0 or higher (BDO Nonprofit Standard)

How this ratio works

Formula: Current assets ÷ current liabilities. Working capital is the dollar version: current assets − current liabilities.

Reference point: 1.0 or higher means current assets cover current liabilities.

Source: BDO, Nonprofit Standard: financial statement analysis (reprinted by the NH Center for Nonprofits)

What a weak number usually means: Payables or short-term debt are growing faster than cash and receivables.

Example: $520,000 ÷ $260,000 = 2.0, with $260,000 of working capital.

Spending Ratios

Program Expense Ratio

The share of spending that goes directly to your programs.

Numbers you need

Program service expenses

Form 990, Part IX, line 25, column B

Total expenses

Form 990, Part I, line 18 (equals Part IX, line 25, column A)

Your result

Reference point: 65% or more (BBB); 75% or more (CharityWatch)

How this ratio works

Formula: Program service expenses ÷ total expenses (Form 990, Part IX, line 25, column B ÷ column A).

Reference point: BBB Wise Giving Alliance Standard 8 asks for at least 65%. CharityWatch considers 75% or more highly efficient.

Source: BBB Wise Giving Alliance, Standards for Charity Accountability; CharityWatch, Our Charity Rating Process

What a weak number usually means: Shared costs are not being allocated to programs, or administrative and fundraising costs grew faster than programs.

Example: $1,900,000 ÷ $2,340,000 = 81.2%.

Note: This ratio depends on how you split shared costs like rent and leadership time between programs and administration. Use a method that's reasonable and written down, not one chosen to improve the number.

Definition: see program expenses in our nonprofit accounting glossary.

Fundraising Efficiency (Cost to Raise $1)

How much you spend to raise each contributed dollar.

Numbers you need

Fundraising expenses

Form 990, Part IX, line 25, column D

Contributions, excluding government grants

Form 990, Part VIII, line 1, less government grants

Your result

Reference point: $0.35 or less per $1 raised (BBB); $0.25 or less (CharityWatch)

How this ratio works

Formula: Fundraising expenses ÷ contributions, excluding government grants.

Reference point: BBB Wise Giving Alliance Standard 9 asks that fundraising cost no more than 35% of related contributions. CharityWatch considers $25 or less per $100 raised highly efficient.

Source: BBB Wise Giving Alliance, Standards for Charity Accountability; CharityWatch, Our Charity Rating Process

What a weak number usually means: Events or campaigns cost more than they bring in, or contributions fell while fundraising costs stayed the same.

Example: $140,000 ÷ $900,000 = $0.16 per dollar raised.

Note: BBB defines related contributions as donations, legacies, and other gifts received as a result of fundraising efforts. The calculator uses contributions excluding government grants as the closest figure most organizations have.

Sustainability Ratios

Operating Margin

Whether the year's revenue covered the year's spending, and by how much.

Numbers you need

Total revenue

Form 990, Part I, line 12, or your statement of activities

Total expenses

Form 990, Part I, line 18 (equals Part IX, line 25, column A)

Your result

Reference point: Positive means a surplus (BDO Nonprofit Standard)

How this ratio works

Formula: (Total revenue − total expenses) ÷ total revenue.

Reference point: No single standard. A positive number means a surplus.

Source: BDO, Nonprofit Standard: financial statement analysis (reprinted by the NH Center for Nonprofits)

What a weak number usually means: Expenses grew faster than revenue, or a funding source fell short.

Example: ($2,280,000 − $2,340,000) ÷ $2,280,000 = -2.6%, a deficit of $60,000.

Note: Spending prior-year restricted grants can produce a planned deficit like this one. Read it together with releases from restriction.

Savings Indicator

How much the organization added to, or used from, its net assets relative to a year of spending.

Numbers you need

Total revenue

Form 990, Part I, line 12, or your statement of activities

Total expenses

Form 990, Part I, line 18 (equals Part IX, line 25, column A)

Your result

Reference point: Positive means net assets are growing (BDO Nonprofit Standard)

How this ratio works

Formula: (Total revenue − total expenses) ÷ total expenses.

Reference point: Positive means net assets are growing. How high it should be depends on your reserve goals.

Source: BDO, Nonprofit Standard: financial statement analysis (reprinted by the NH Center for Nonprofits)

What a weak number usually means: Repeated negative years are drawing down reserves.

Example: -$60,000 ÷ $2,340,000 = -2.6%.

Note: Some guides call a savings indicator above 1.0 ideal. That would mean a surplus larger than a full year of spending, which is not a realistic target.

Revenue and Debt Ratios

Revenue Concentration

How much of your revenue depends on one funder or contract.

Numbers you need

Largest single revenue source

Your revenue detail by funder or program

Total revenue

Form 990, Part I, line 12, or your statement of activities

Your result

Reference point: No published standard; track the trend

How this ratio works

Formula: Largest single revenue source ÷ total revenue.

Reference point: No published standard. Watch the trend and the terms attached to that source. In early 2025, 33% of nonprofits reported at least one government funding disruption (Independent Sector).

Source: Independent Sector, nonprofits squeezed by growing need and fewer resources

What a weak number usually means: One source is growing while others shrink, so a single cut would force service reductions.

Example: $600,000 government award ÷ $2,280,000 = 26.3%.

Liabilities to Assets

How much of what you own is owed to others.

Numbers you need

Total liabilities

Form 990, Part X, line 26

Total assets

Form 990, Part X, line 16

Your result

Reference point: No published threshold; track the trend

How this ratio works

Formula: Total liabilities ÷ total assets (Form 990, Part X, line 26 ÷ line 16).

Reference point: No published threshold. Charity Navigator reports this ratio in its ratings without publishing a cutoff. Track the trend.

Source: Charity Navigator, Accountability and Finance methodology

What a weak number usually means: New borrowing, deferred revenue, or unpaid bills are growing faster than assets.

Example: $420,000 ÷ $1,400,000 = 30.0%.

Do You Have Too Much in Reserve?

Most guides only warn about having too little in reserve. Evaluators also look at the other end.

Reserve Ceiling

Whether you are holding more than donors and evaluators consider reasonable.

Numbers you need

Net assets without donor restrictions

Form 990, Part X, line 27

Land, buildings, and equipment, net

Form 990, Part X, line 10 (net amount)

Total expenses

Form 990, Part I, line 18 (equals Part IX, line 25, column A)

Your result

Reference point: No more than 3 times annual expenses (BBB)

How this ratio works

Formula: Unrestricted net assets available for use (net assets without donor restrictions − net fixed assets) ÷ total annual expenses.

Reference point: BBB Wise Giving Alliance Standard 10: no more than three times the past year's expenses or the current year's budget, whichever is higher. CharityWatch downgrades charities holding more than three years of their budget in reserve, and gives an F at five years or more.

Source: BBB Wise Giving Alliance, Standards for Charity Accountability; CharityWatch, Our Charity Rating Process

What a high number can mean: Donors can read it as money not being put to work.

Example: ($760,000 − $450,000) ÷ $2,340,000 = 0.13 times expenses, far below the 3× ceiling.

Ratios to Read Together

One ratio can look healthy while another shows the problem behind it. Check these pairs together.

Pattern What it can mean
Months of cash falling while revenue concentration rises Your cash cushion is shrinking as you become more dependent on one revenue source.
A surplus, but months of LUNA falling The surplus may have gone into buildings, equipment, or restricted funds instead of liquid unrestricted net assets, or expenses grew, so the same LUNA covers fewer months. Check where it went.
A strong program expense ratio with a low operating reserve ratio Programs may be growing faster than the organization's ability to absorb a funding delay or cut.
A healthy current ratio with few months of cash Current assets may be mostly receivables or pledges. Check how quickly they turn into cash.
Cost to raise $1 rising while contributions fall Fundraising spending may not have come down with contributions.

How Often to Review Each Ratio

Frequency Ratios
Monthly Months of cash on hand, current ratio
Quarterly Operating margin, revenue concentration, months of LUNA
Annually, with the audit and Form 990 Program expense ratio, fundraising efficiency, liabilities to assets, operating reserve ratio, reserve ceiling, savings indicator

Questions Board Members Should Ask

  • How many months could we operate on cash we can actually use, and is that number rising or falling?
  • What is our operating reserve target, and how far are we from it?
  • How much of our revenue comes from our largest funder, and what is our plan if it changes?
  • Did we end the year in a surplus or a deficit, and how much of it came from spending grants received in earlier years?
  • How do we allocate shared costs between programs, administration, and fundraising?

For help reading the statements behind these numbers, see our guide to nonprofit financial statements.

This page is for general education and does not constitute legal, tax, or accounting advice. Standards and evaluator methods can change; check the cited sources before relying on a specific threshold.

Frequently Asked Questions

What are nonprofit financial ratios?

Nonprofit financial ratios are calculations that compare figures from a nonprofit's financial statements or Form 990 to show its financial health. Common examples include months of cash on hand, the operating reserve ratio, the program expense ratio, and fundraising efficiency. Tracked over several years, they show whether liquidity, spending, and sustainability are improving or getting worse.

What is a good operating reserve ratio for a nonprofit?

The Nonprofit Operating Reserves Initiative recommends a minimum of 25%, which is about three months of annual expenses. Organizations with volatile revenue or few controllable expenses may need more. At the other end, BBB Wise Giving Alliance standards ask that unrestricted net assets available for use not exceed three times annual expenses or the current budget, whichever is higher.

Which financial ratios should a nonprofit board review?

Most boards should review months of cash on hand and the current ratio monthly, operating margin and revenue concentration quarterly, and the program expense ratio, fundraising efficiency, and operating reserve ratio each year with the audit or Form 990. Ask how each number compares with prior years and with the organization's reserve policy.

Sources

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