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Monday, October 3, 2016

Metric Mondays #4: Administrative Expense Percentage

Last week, we focused on posting financial documents online. Today’s Metric Monday will address Administrative Expense Percentage. 

Administrative (or simply “Admin”) Expense Percentage looks at the amount of money spent on management and general expenses reported on an organization’s Form 990 in relation to its total expenses. Any cost that is not allocated to actual program work or to fundraising activities is allocated here. It is important to note that this total does not consist of ALL employee salaries, as a significant portion of a staff member’s salary may be allocated to program, if the employee’s work is mission-related. For example, an administrative assistant’s salary at an animal shelter may be an admin cost, while the salary of a veterinarian at the same shelter may largely be allocated as program.

When looking at admin expense percentage, we check to make sure an organization’s admin allocation is in line with other organizations performing similar types of work. For most organizations, anything less than 15% spent on admin is considered excellent and is worth full credit for this metric. By keeping admin expenses in check, the organization demonstrates that it efficiently converts donor dollars into the mission.

To learn more about admin expense percentage, please see our methodology.

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