Program expense ratio, explained
What share of spending actually reaches the mission — how the ratio is computed, what's a good number, and when it misleads.
Published July 7, 2026 · CharityIndex editorial team
By the numbers — from the CharityIndex dataset
88%
Median program expense ratio
89%
Share spending 75%+ on programs
Across 81,336 e-filed Form 990s with a functional expense split, the median program expense ratio is 88% (CharityIndex analysis of IRS data).
89% of those filings direct at least 75% of spending to programs — the threshold watchdogs generally call efficient.
The program expense ratio is program spending divided by total functional expenses, both from Form 990 Part IX. If a charity spends $9M on programs out of $10M total, its ratio is 90%.
What's a good number?
- Watchdogs generally treat 75%+ as efficient; 85%+ is excellent.
- Below 50% deserves a hard look — where is the money going instead?
When the ratio misleads
- Young organizations legitimately invest in staff, systems and fundraising capacity before program spending scales.
- Some models (research institutes, advocacy) classify expenses differently from direct-service charities — compare within a cause area, not across.
- A single year can be distorted by a large grant or a capital campaign. Look at the trend across several filings.
CharityIndex's letter grade combines this ratio with fundraising efficiency and shows the full expense split on each profile, so you can judge the context yourself.