Tackling the Overhead Myth: The True Cost of Meeting Our Mission

overheadmythAsk any nonprofit professional and they will tell you that one of the most often repeated mantras of working in the not for profit sector is “Sacrifice.” Philanthropic professionals are often asked to give up every day comforts that are often taken for granted in the for profit sector. Going home at 5:00? What is that like? Weekends? What are those? The latest advancements in technology? You mean like, mechanical pencils?

In the name of our collective causes and in order to keep our overhead costs low, we happily waive our rights to our potential productivity and, all too often, sanity. Add to that the funding challenges of our current economic climate and complications can quickly escalate, leaving the hard working staff of such charitable organizations feeling overwhelmed and under-appreciated  While making a difference involves personal sacrifice, it is important for us to seek the wisdom of that other age-old mantra made popular by well-known author on personal time management, Alan Lakein, “Work smarter, not harder.”

Jacob Harold, president and CEO of GuideStar, an information service specializing in reporting on U.S. nonprofit companies, stresses,“Nonprofits need to invest in their organizations to be able to effectively serve their missions.”

GuideStar has partnered with fellow philanthropic powerhouses, Charity Navigator and the Better Business Bureau Wise Giving Allianceto dispel the ongoing myth that the best way to judge the efficiency of a charity is by keeping the percentage of expenses that go to administrative and fundraising costs as low as possible.

Harold adds, “When we focus solely or predominantly on overhead…we starve charities of the freedom they need to best serve the people and communities they are trying to serve.”

This doesn’t mean that funds should be funneled to purchasing the latest ergonomically correct office desk, or opening up a lounge outfitted with massage chairs and sleep pods like the pampered personnel over at Google.

By making more room in your organization’s budget for important investments in training, planning, evaluation, internal systems and fundraising your organization’s impact can be easily doubled while your staff’s skills can truly be afforded the time to shine.

Donor messaging plays a big part in this shift from the negative overhead mindset. Whether it is through a monthly newsletter, an annual report or social media updates , it is important to let your donors know that their gifts are being put to use to help further the mission of your organization.  The simple act of inviting board members to attend a training session or a planning meeting not only leaves them with a sense of feeling engaged, but widens the level of transparency between your organization and its funding members. But the messaging doesn’t stop there! It is also important to release follow up messages that show the results of these investments on the home front. Did that spiffy new office computer (purchased with donor funds) help you design some killer brochures? Let your donors know!

The act of working smarter and not harder doesn’t happen over night, and change tends to happen a little slower in the nonprofit world. But, through a combination of increased transparency and careful planning, you can make the investments you need to take the reach of your nonprofit to the next level.

Tackling the Overhead Myth – An Upcoming Blog Series

Overhead Myth
Over the next several weeks, The Rebecca Gordon Group will be exploring the issues around impact vs. overhead in the nonprofit sector.  The idea is to spark the discussion and give nonprofit leaders an opportunity to weigh in on the real issue of what good outcomes cost.

To join the discussion, subscribe now by entering your email address in the sidebar to the right. By subscribing you will receive each new blog post by email. The blog series will cover the following topics:

  1. Nonprofits and the Economy — Our run in with Upworthy
  2. The True Cost of Meeting Our Mission
  3. What Should We Pay Nonprofit Executives?
  4. Talking To Donors About Investing In Administration
  5. The New World Of Saving The World.