End the Overhead Myth
Nonprofit HR has just joined GuideStar, Charity Navigator, and BBB Wise Giving Alliance in the pledge to end the overhead myth. Instead of focusing on the percentage of a charity’s expenses that go to administrative and fundraising costs—commonly referred to as “overhead”—we need to focus on what really matters: results and impact.
GuideStar, Charity Navigator, and BBB Wise Giving Alliance published an open letter denouncing the “overhead ratio” as a valid indicator of nonprofit performance. The letter, signed by all three organizations’ CEOs, marks the beginning of a campaign to correct a common misconception about the importance of a low overhead ratio.
According to the letter, signed by the CEOs of all three organizations, GuideStar, Charity Navigator, and BBB Wise Giving Alliance stated, “Overhead costs include important investments charities make to improve their work: investments in training, planning, evaluation, and internal systems—as well as their efforts to raise money so they can operate their programs. 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.” The letter goes on to recommend that donors focus their attention on more relevant factors behind nonprofit performance: transparency, governance, leadership, and results.
“Nonprofits often face undue criticism for their internal spending on salaries, benefits and training and development,” said President and CEO of Nonprofit HR, Lisa Brown Morton. “Staff salaries and benefits as well as internal operations like human resources have to be funded properly so that organizations can attract, retain and develop their employees successfully.”
“It’s nonprofit employees, as well as volunteers, that “do” the work of nonprofits. It’s unfortunate organizations are made to feel that they are misappropriating or misusing their resources when they choose to proactively invest in strengthening the talent that they have. A well-run nonprofit with a healthy, well-trained workforce drives results and impact,” said Morton. “That is why we have begun advocating to funders to keep internal organizational health and human resources as much of a priority as mission impact. The two are not mutually exclusive.”
Join Nonprofit HR in spreading the word about this important topic. Nonprofits are encouraged to use the information found at OverheadMyth.com in their donor solicitations.
End the Overhead Myth today!