How much of my donation goes to the cause: program vs overhead explained

Key takeaways

• Overhead is normal and necessary. Every charity has operating costs – staff, technology, fundraising, and compliance – and spending on them is not a red flag.
• Benchmarks (such as 75–85% to programs) provide context, but can be misleading by themselves. Transparency and how funds are managed are more important. 
• “100% to the cause” can mean two things: overhead is covered by a separate donor, or expenses are not reported transparently. 
• Low overhead is not always a positive signal. Underinvestment in staff, systems, and fundraising can lead to a nonprofit starvation cycle, reducing long-term impact.
• Children of Heroes allocated 77% of expenses to programs in 2024, 14% to fundraising and marketing, and 9% to general and administrative costs – within sector benchmarks.
• To verify a charity’s overhead, review its annual report, IRS Form 990, or profiles on Charity Navigator, Candid (GuideStar), or BBB Wise Giving Alliance.

Donating to a charity is one of the most direct ways to support people in need. A common question donors ask is: how much of my donation goes to the cause? The short answer: not 100% – and that is expected.

Every organization has operating costs. What matters is whether those costs are reasonable, transparent, and well managed. Research suggests that many donors do not fully understand this. A study published by the Association of Fundraising Professionals (AFP) found that most American charitable donors have little idea what their favorite nonprofit spends on overhead.

This article explains how charity finances work, what overhead means, and how to evaluate whether an organization uses donations responsibly. It also includes a breakdown of how Children of Heroes allocates and reports funds.

How charity finances work: program vs overhead

When a nonprofit receives a donation, it allocates that money across two main categories of expenses: program and overhead.

Program expenses are costs directly tied to delivering the organization’s mission. For a children’s charity, this includes financial aid to families, psychological support, medical care, education, food and supplies, and legal assistance.

Overhead expenses cover the resources required to run the organization and make support possible. These fall into two categories:

• Administrative expenses: salaries, accounting, legal compliance, office costs, IT infrastructure, financial audits, and governance.
• Fundraising expenses: donor communications, marketing campaigns, grant writing, events, and maintaining donation systems.

The overhead ratio is the percentage of total expenses allocated to administrative and fundraising costs.

Charity overhead costs: benchmarks

There is no single universal standard for what overhead ratio is the most effective or “right”. The table below shows how major charity watchdogs approach overhead:

All major watchdogs agree on one point: overhead ratio alone is not a reliable indicator of a charity’s effectiveness and trustworthiness.

In a joint letter, the leaders of Charity Navigator, Candid, and BBB Wise Giving Alliance warned that focusing too much on overhead “can do more damage than good.” A more accurate assessment looks at the full picture: impact, transparency, and how responsibly resources are managed.

Common myths about charity overhead

Myth 1: A lower overhead ratio always means a better charity

Not necessarily. Extremely low overhead may indicate underinvestment in staff, financial controls, or technology, all of which are needed to deliver consistent, high-quality support.

Myth 2: 100% of my donation goes to the cause

When a charity makes this claim, it could mean two things:

1. A separate donor (such as a corporate partner or major philanthropist) covers all operational costs, so overhead exists but is funded elsewhere.
2. The organization does not report its expenses transparently.

Myth 3: Fundraising expenses are wasteful

Fundraising is what enables a charity to sustain and grow its programs. Without it, most organizations cannot operate long term. Research shows that investing in overhead – including staff, systems, and fundraising – is associated with higher revenue and greater overall impact.

Risks of having low overhead

Low overhead can be a warning sign.

Researchers describe a nonprofit starvation cycle:

Donor pressure to minimize overhead → reduced investment in staff, training, and systems → weaker operations and infrastructure → declining quality, efficiency, and sustainability

When organizations underinvest in overhead, they may:

• Lack qualified staff to manage finance, operations, and development
• Struggle to train and retain employees, leading to high turnover
• Deliver lower-quality work due to limited capacity or experience
• Experience system failures or data loss due to weak IT infrastructure
• Be unable to track donors or fundraising performance
• Lack tools to measure outcomes or report results

Over time, this can lead to organizations that are less stable and less able to scale their impact.

The goal is not the lowest possible overhead but the level of investment needed to deliver consistent, high-quality support.

Popular children’s charities overhead costs

Here is an overview of how major international children’s organizations allocate their expenses, based on publicly available annual reports and charity watchdog data.

* Figures are approximate and reflect the most recent reports. 

Important context when comparing overhead ratios:

• Large international organizations often receive significant in-kind donations (such as medicines, food, or equipment), which can affect how expenses are reported.
• Some charities allocate joint costs (e.g., campaigns that combine fundraising and program education) differently.
• Expense ratios can vary year to year due to emergency responses, new program launches, or major investments in infrastructure.

Where to find charity overhead costs

Overhead information for most established nonprofits is publicly available. Key sources to check:

1. The charity’s website. Reputable organizations publish annual reports and audited financial statements. Look for a section titled Reporting, Impact, or Transparency.
2. IRS Form 990 (for US nonprofits). US-registered nonprofits must file a Form 990 annually with the IRS. This document shows the breakdown of program, administrative, and fundraising expenses. Forms 990 are publicly accessible through ProPublica’s Nonprofit Explorer.
3. Charity watchdog platforms. Charity Navigator, Candid (GuideStar), BBB Wise Giving Alliance, and CharityWatch aggregate financial data and provide independent evaluations.

What if overhead information is not publicly available?

If a charity does not publish audited financial statements, does not file a Form 990 (where applicable), and does not clearly show how donations are used, this is a transparency concern. Legitimate nonprofits typically disclose this information openly.

Children of Heroes: overhead breakdown

Children of Heroes is a Ukrainian nonprofit providing long-term support to children who have lost one or both parents as a result of Russia’s full-scale war against Ukraine. 

Founded in April 2022, it operates legal entities in Ukraine, the United States (501(c)(3)), and the Netherlands (ANBI-recognized), and publishes annual reports prepared in accordance with International Financial Reporting Standards (IFRS).

Below is a summary of how Children of Heroes has allocated its expenses over three reporting years:

2024 breakdown in detail

In 2024, Children of Heroes allocated 77% of total expenses to its assistance programs, which include:

• Financial aid: direct monetary support to families
• Humanitarian aid: food, hygiene products, clothing, and essential supplies
• Psychological support: individual and group therapy, counseling camps
• Medical care: consultations, treatment, insurance, and health supplies
• Educational support: tutoring, IT and language courses, gadgets for remote learning
• Legal and crisis assistance: documentation support, evacuation, housing recovery

The remaining 14% went to fundraising and marketing – the communications and outreach that sustain donor relationships and generate the revenue needed to run programs – and 9% to general and administrative expenses, covering governance, financial control, staff management, and compliance.

This structure reflects a majority of funding directed to programs, with the remaining share supporting operations and sustainability.

How this compares to sector benchmarks

Children of Heroes’ 77% program expense ratio falls within the range commonly seen among reputable children’s charities. It meets the BBB Wise Giving Alliance’s minimum threshold of 65% and is comparable to figures reported by large international organizations such as Plan International USA (~73%), SOS Children’s Villages USA (~77%), and UNICEF USA (~84%).

At the same time, Children of Heroes shows a consistent increase in program spending and a reduction in overhead over recent years.

Children of Heroes’ transparency сredentials

Beyond the numbers, Children of Heroes demonstrates financial accountability through:

• Regular reporting: monthly and annual reports published on its website.
• Audited financial statements: IFRS-compliant reports reviewed by an independent audit firm (a member of Crowe Global).
• External transparency recognition: Platinum Seal of Transparency from Candid and Effective Organization badge from GlobalGiving.
• International affiliation: membership in Eurochild, a European children’s rights network.
• Governance transparency: publicly listed board of directors, supervisory board, and management team.
• Internal policies: published policies on ethics, conflicts of interest, financial control, safeguarding, and whistleblowing.
• Media coverage: features in The Guardian, The Times, The Telegraph, and Bild.

These elements allow donors to independently verify how funds are managed and reported.

Conclusion

The overhead ratio gives context, but it doesn’t show the full picture. A charity spending 20% on overhead may be building capacity, while one spending 5% may be underinvesting in quality and sustainability.

What overhead figures can tell you:

• Whether spending is broadly within accepted ranges
• Whether most funds are directed to programs
• Whether the organization invests in fundraising to sustain its work

What overhead figures cannot tell you:

• Whether programs are effective
• Whether beneficiaries receive consistent, high-quality support
• Whether governance and safeguarding practices are strong
• Whether financial reporting is accurate and independently verified

Overhead is an important indicator, but transparency and impact matter more.