{"id":21671,"date":"2025-05-05T11:00:00","date_gmt":"2025-05-05T10:00:00","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=21671"},"modified":"2025-05-27T12:08:21","modified_gmt":"2025-05-27T11:08:21","slug":"key-metrics-financial-health-non-profit","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/key-metrics-financial-health-non-profit\/","title":{"rendered":"12 key metrics to monitor the financial health of your non-profit"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\t12 key metrics to monitor the financial health of your non-profit\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2025-05-05T11:00:00+01:00\">5 May, 2025<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"12 key metrics to monitor the financial health of your non-profit\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/key-metrics-financial-health-non-profit\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/author\/staceymcintosh\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2018\/11\/Stacey-McIntosh-350-1.jpg\" class=\"entry-author__image\" alt=\"\" \/>\t\t\t\t<span class=\"entry-author__name\">Stacey McIntosh<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>Non-profit finance leaders are responsible for ensuring good stewardship of donor dollars, so the greatest possible percentage of resources can go toward achieving your mission and not operational expenses. <\/p>\n\n\n\n<p>Non-profit leaders want to make the biggest impact possible, and donors also demand full transparency and accountability before committing their money to a cause.<\/p>\n\n\n\n<p>Right now, it\u2019s never been more important to find ways to continuously monitor the financial health of your nonprofit organisation. <\/p>\n\n\n\n<p>In this article, we reveal 12 key metrics for you to follow.<\/p>\n\n\n\n<p>Here&#8217;s what we cover:<\/p>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-how-donors-use-financial-performance-metrics-to-assess-stewardship\" data-level=\"2\">How donors use financial performance metrics to assess stewardship<\/a><\/li><li><a href=\"#h-12-key-metrics-to-monitor-the-financial-health-of-your-non-profit\" data-level=\"2\">12 key metrics to monitor the financial health of your non-profit<\/a><ul><li><a href=\"#h-1-revenue-composition\" data-level=\"4\">1. Revenue composition<\/a><\/li><li><a href=\"#h-2-revenue-reliability\" data-level=\"4\">2. Revenue reliability<\/a><\/li><li><a href=\"#h-3-cash-flow-from-operations\" data-level=\"4\">3. Cash flow from operations<\/a><\/li><li><a href=\"#h-4-liquidity\" data-level=\"4\">4. Liquidity<\/a><\/li><li><a href=\"#h-5-working-capital-ratio-reserve-ratio\" data-level=\"4\">5. Working capital ratio\/reserve ratio<\/a><\/li><li><a href=\"#h-6-percentage-spent-on-programmes\" data-level=\"4\">6. Percentage spent on programmes<\/a><\/li><li><a href=\"#h-7-programme-expense-growth\" data-level=\"4\">7. Programme expense growth<\/a><\/li><li><a href=\"#h-8-administrative-expense-percentage\" data-level=\"4\">8. Administrative expense percentage<\/a><\/li><li><a href=\"#h-9-fundraising-expense-percentage\" data-level=\"4\">9. Fundraising expense percentage<\/a><\/li><li><a href=\"#h-10-percentage-spent-on-fundraising\" data-level=\"4\">10. Percentage spent on fundraising<\/a><\/li><li><a href=\"#h-11-liabilities-as-a-percent-of-total-assets\" data-level=\"4\">11. Liabilities as a percent of total assets<\/a><\/li><li><a href=\"#h-12-liability-composition\" data-level=\"4\">12. Liability composition<\/a><\/li><\/ul><\/li><li><a href=\"#h-final-thoughts\" data-level=\"2\">Final thoughts<\/a><\/li><\/ul><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-donors-use-financial-performance-metrics-to-assess-stewardship\"><strong>How donors use financial performance metrics to assess stewardship<\/strong><\/h2>\n\n\n\n<p>Donors and funders want to contribute to non-profit organisations that can deliver on their missions. They don\u2019t want their donations to be wasted or used in ways that generate less than the maximum desired impact. <\/p>\n\n\n\n<p>Today, funders demand higher levels of financial transparency and accountability than ever before. <\/p>\n\n\n\n<p>Non-profit finance leaders must be prepared to monitor the financial health of their non-profit organisations and demonstrate sustainability and stewardship to funders.<\/p>\n\n\n\n<p>Many donors and funders use online analysis tools to assess the soundness of non-profit organisations. <\/p>\n\n\n\n<p>Not only are these organisations experts on non-profit financial health, but each offers free financial reports and\/or charity ratings to help donors explore non-profits before deciding to give.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-12-key-metrics-to-monitor-the-financial-health-of-your-non-profit\"><strong>12 key metrics to monitor the financial health of your non-profit<\/strong><\/h2>\n\n\n\n<p>To monitor non-profit financial health, stakeholders will want to understand an organisation\u2019s funding model\/revenue, cash flow\/sustainability, expenses\/efficiency, and debt management. <\/p>\n\n\n\n<p><a href=\"https:\/\/www.sage.com\/en-gb\/sage-business-cloud\/intacct\/industries\/non-profit\/\">Accounting software for non-profits<\/a> can play a crucial role in streamlining these aspects for enhanced transparency and informed decision-making. <\/p>\n\n\n\n<p>Your organisation\u2019s executives and board should be kept aware of these key financial metrics routinely. Your chief finance leader should probably review daily, preferably in an easy-to-visualise format like a dashboard that can be shared quickly if trends demand action.<\/p>\n\n\n\n<p>Here are 12 key metrics than can help organisations keep a watchful eye on financial health trends<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Funding model and revenue<\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-1-revenue-composition\"><strong>1. Revenue composition<\/strong><\/h4>\n\n\n\n<p>What sources of revenue has your organisation secured? How much is unrestricted and available for use?<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-2-revenue-reliability\"><strong>2. Revenue reliability<\/strong><\/h4>\n\n\n\n<p>Can you count on revenue recurring? Does your organisation have a good track record of bringing in a certain amount of revenue? <\/p>\n\n\n\n<p>This can be studied through historical trends.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Cash flow and sustainability<\/h3>\n\n\n\n<p>These metrics help you assess how well you can pay the bills for your programme and how long your organisation could sustain services if revenue suddenly declined. <\/p>\n\n\n\n<p>Most non-profit organisations should strive for liquidity or reserve ratio of three to six months.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-3-cash-flow-from-operations\"><strong>3. Cash flow from operations<\/strong><\/h4>\n\n\n\n<p>From the statement of cash flows, a positive cash flow from operations shows an organisation can cover their costs of unrestricted operations and programming.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-4-liquidity\">4. Liquidity<\/h4>\n\n\n\n<p>Cash on hand divided by average monthly expenses.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-5-working-capital-ratio-reserve-ratio\"><strong>5. Working capital ratio\/reserve ratio<\/strong><\/h4>\n\n\n\n<p>Expendable net assets (unrestricted and temporarily restricted net assets less net investment in property and equipment and less any nonexpendable components) divided by daily total expenses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Expenses and efficiency<\/h3>\n\n\n\n<p>Donors and funders prefer to give to charities that can keep administrative and fundraising expenses low, thereby allocating most donations toward programme expenses.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-6-percentage-spent-on-programmes\">6. Percentage spent on programmes<\/h4>\n\n\n\n<p>Programme service expenses divided by total expenses.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-7-programme-expense-growth\"><strong>7. Programme expense growth<\/strong><\/h4>\n\n\n\n<p>Compares programme expenses over time. Organisations that consistently grow programme expenses (and the revenue to support them) reassure donors of a greater impact on their missions.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-8-administrative-expense-percentage\"><strong>8. Administrative expense percentage<\/strong><\/h4>\n\n\n\n<p>Administrative expenses divided by total expenses.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-9-fundraising-expense-percentage\"><strong>9. Fundraising expense percentage<\/strong><\/h4>\n\n\n\n<p>Fundraising expenses divided by total expenses.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-10-percentage-spent-on-fundraising\"><strong>10. Percentage spent on fundraising<\/strong><\/h4>\n\n\n\n<p>Total fundraising expenses divided by contributions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Debt management<\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-11-liabilities-as-a-percent-of-total-assets\"><strong>11. Liabilities as a percent of total assets<\/strong><\/h4>\n\n\n\n<p>Organisations with 50% or more on this score may have trouble managing debt.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-12-liability-composition\"><strong>12. Liability composition<\/strong><\/h4>\n\n\n\n<p>What types of debt has your organisation incurred and how is that debt structured?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-final-thoughts\"><strong>Final thoughts<\/strong><\/h2>\n\n\n\n<p>When a non-profit\u2019s needs are high and resources are limited, donors pay extremely close attention to stewardship in order to make difficult funding decisions. <\/p>\n\n\n\n<p>At the same time, greater pressure on service delivery combined with possibly flat or declining contributions mean that non-profit finance leaders have to track financial indicators closely for their organisations. <\/p>\n\n\n\n<p>Key metrics, presented visually and powered with real-time data, can help key stakeholders monitor the financial health of their non-profit organisations and present proven measures of stewardship to donors.<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-b1a63862-3fa0-4a5e-bb67-c76b88bbc6b8\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Learn about the key metrics that will help you monitor the financial health of your non-profit organisation and how using dashboards can help.<\/p>\n","protected":false},"author":346,"featured_media":16350,"menu_order":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[6],"tags":[135,159],"business_type":[3],"lilypad":[],"context":[],"industry":[],"persona":[68,71],"imagine_tag":[96,99,336],"coauthors":[353],"class_list":["post-21671","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-business-finances","tag-midsized-business","business_type-medium-sized-business"],"sage_meta":{"region":"en-gb","author_name":"Stacey McIntosh","featured_image":"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1423343304.jpg","imagine_tags":{"96":"Medium businesses","99":"Non-profit","336":"Nonprofits"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice UK","distributor_original_site_url":"https:\/\/www.sage.com\/en-gb\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/21671","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/users\/346"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/comments?post=21671"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/21671\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media\/16350"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media?parent=21671"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/categories?post=21671"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/tags?post=21671"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/business_type?post=21671"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/lilypad?post=21671"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/context?post=21671"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/industry?post=21671"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/persona?post=21671"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/imagine_tag?post=21671"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/coauthors?post=21671"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}