One of the questions Our Community is most regularly asked by the not-for-profits we help is: “How long is a piece of string?”
Well, not exactly; but we are often asked how much a not-for-profit should be spending on administration costs as opposed to program delivery – and it’s a very similar question.
The ratio of fundraising and administrative costs to total expenditure – or the FACE ratio – is often seen as a benchmark for charity efficiency, with a ratio of more than 30% seen as going into the red zone.
But there are lots of problems with this. Firstly, there’s the question of definition. What counts as administration? What counts as program delivery? Where do rent, power and salaries go? As a result, there’s considerable scope for creative accounting.
To view the Third Sector article in full, click here.