Nonprofit Overhead Is Not Evil
Overhead is seen as the devil of the not-for-profit world. Here’s why that conventional wisdom is wrong.
from Fast Company:
The assumption is that when 99% of your expenses go to programs, you are fantastic. Not-for-profits proudly proclaim, “95% of our expenses go to programs fighting poverty!” as if they’re a gazillion times more effective than those that spend a pathetic 85%. Web sites that track not-for-profit financials perpetuate the “overhead is evil” myth by lauding groups that curtail it.
… But low overhead doesn’t necessarily mean an organization is awesome at fighting poverty, or that its turnover is low and its people productive. And it certainly doesn’t guarantee that the group is spending wisely.
… Overhead is a beast, a mass of ambiguity and confusion … . For instance, is it better to have no staff dedicated to grant writing? Without that person, fund-raising pressure could distract the program people. Worse, we might not land any grants at all.