from Stanford Social Innovation Review:

A vicious cycle is leaving nonprofits so hungry for decent infrastructure that they can barely function as organizations – let alone serve their beneficiaries. The cycle starts with funders’ unrealistic expectations about how much running a nonprofit costs, and results in nonprofits’ misrepresenting their costs while skimping on vital systems – acts that feed funders’ skewed beliefs. To break the nonprofit starvation cycle, funders must take the lead.

The Nonprofit Starvation Cycle

Organizations that build robust infrastructure – which includes sturdy information technology systems, financial systems, skills training, fundraising processes, and other essential overhead – are more likely to succeed than those that do not. This is not news, and nonprofits are no exception to the rule.

Yet it is also not news that most nonprofits do not spend enough money on overhead. In our consulting work at the Bridgespan Group, we frequently find that our clients agree with the idea of improving infrastructure and augmenting their management capacity, yet they are loath to actually make these changes because they do not want to increase their overhead spending. But underfunding overhead can have disastrous effects…