7 Nonprofit Financial Ratios: Definitions & Calculators
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You’ve probably used key performance indicators for various aspects of your nonprofit’s strategy in the past. KPIs are useful for quantifying the level of success of your nonprofit. For example, if you know your goal is to raise $500,000 for your nonprofit, you can easily see that you succeeded when you raise $530,000. Your nonprofit finance team also leverages KPIs to define financial success, measure the health of your nonprofit, and manage your financial standing. These KPIs are often derived from nonprofit financial ratios.
Nonprofit financial ratios are calculations used to measure your organization’s financial state and to determine the financial health of your organization. You can use these ratios to determine which aspects of your programming and operations are most successful and which need addressing for a healthier organization. Once you know the financial areas most important to your cause, you can measure your ratio, develop a goal, and strategize to improve it as a KPI.
