Fees for Services Expense Ratio — get_expenses_feesforservice

Total fees paid for outside services (management, legal, accounting, lobbying, professional fundraising, investment management, and other) as a share of total functional expenses.

Formula:

expenses_feesforservice = ( mgmt_fees + legal_fees + accounting_fees
                            + lobbying_fees + prof_fundraising_fees
                            + investment_mgmt_fees + other_fees )
                          / total_expenses

Definitional Range

Bounded [0, 1]. Most nonprofits show values in the [0.01, 0.20] range.

Benchmarks and rules of thumb

No universal benchmark; most meaningful within subsector or over time.
Unusually high investment management fees relative to total expenses may indicate poor endowment management or excessive fee structures.

Calculated For: 990 filers only.

Usage

get_expenses_feesforservice_ratio( df,
  mgmt_fees            = "F9_09_EXP_FEE_SVC_MGMT_TOT",
  legal_fees           = "F9_09_EXP_FEE_SVC_LEGAL_TOT",
  accounting_fees      = "F9_09_EXP_FEE_SVC_ACC_TOT",
  lobbying_fees        = "F9_09_EXP_FEE_SVC_LOB_TOT",
  prof_fundraising_fees = "F9_09_EXP_FEE_SVC_FUNDR_TOT",
  investment_mgmt_fees = "F9_09_EXP_FEE_SVC_INVEST_TOT",
  other_fees           = "F9_09_EXP_FEE_SVC_OTH_TOT",
  total_expenses       = "F9_09_EXP_TOT_TOT",
  winsorize  = 0.98 ,
  range     = "zo",
  sanitize   = TRUE,
  summarize  = FALSE )

Arguments

df: A data.frame containing the fields required for computing the metric.
mgmt_fees: Management fees (total).
legal_fees: Legal fees (total).
accounting_fees: Accounting fees (total).
lobbying_fees: Lobbying fees (total).
prof_fundraising_fees: Professional fundraising fees (total).
investment_mgmt_fees: Investment management fees (total).
other_fees: Other fees for services (total).
total_expenses: Total functional expenses.
winsorize: Winsorization proportion between 0 and 1 (default 0.98).
range: Character string specifying the theoretical range of the ratio, used to set winsorization bounds. Default "zo". Options: "np" (negative to positive), "zp" (zero to positive), "zo" (zero to one), "nz" (negative to zero), or a custom "lo;hi" pair (e.g. "0;10").
sanitize: Logical (default TRUE).
summarize: Logical (default FALSE).

Value

The original data.frame with four new columns:

expenses_feesforservice (raw ratio)
expenses_feesforservice_w (winsorized)
expenses_feesforservice_z (z-score)
expenses_feesforservice_p (percentile rank, 1-100)

Details

Primary uses and key insights

The fees for services ratio measures the share of total expenses paid to outside contractors across seven categories: management consultants, legal, accounting, lobbying, professional fundraisers, investment managers, and other. It captures the degree to which the organization outsources professional expertise.

Formula variations and their sources

Sum of seven Part IX fee fields (lines 11a-11g, Column A) / total expenses (line 25A).

Canonical citations

Frumkin, P. & Keating, E.K. (2001). The price of doing good. Policy and Society, 20(4), 94-112.

Variables used:

F9_09_EXP_FEE_SVC_MGMT_TOT: Management fees (mgmt_fees)
F9_09_EXP_FEE_SVC_LEGAL_TOT: Legal fees (legal_fees)
F9_09_EXP_FEE_SVC_ACC_TOT: Accounting fees (accounting_fees)
F9_09_EXP_FEE_SVC_LOB_TOT: Lobbying fees (lobbying_fees)
F9_09_EXP_FEE_SVC_FUNDR_TOT: Professional fundraising fees (prof_fundraising_fees)
F9_09_EXP_FEE_SVC_INVEST_TOT: Investment management fees (investment_mgmt_fees)
F9_09_EXP_FEE_SVC_OTH_TOT: Other fees for services (other_fees)
F9_09_EXP_TOT_TOT: Total functional expenses (total_expenses)

Examples

library( fiscal )
data( dat10k )
d <- get_expenses_feesforservice_ratio( df = dat10k )
#> Error in resolve_col(dt, mgmt_fees): None of the specified columns were found in the data: F9_09_EXP_FEE_SVC_MGMT_TOT
head( d[ , c( "expenses_feesforservice", "expenses_feesforservice_w", "expenses_feesforservice_z", "expenses_feesforservice_p" ) ] )
#> Error: object 'd' not found