If you've been in fundraising for more than five minutes, you've likely been asked, "What percentage of my donation goes to overhead?"
Overhead usually means all the expenses not directly related to your programs. You know, those things like equipment, your bookkeeper, and, yes, fundraising.
Every time we ask about overhead, we send the message -- overhead has no connection to program work, and isn't a legitimate thing to spend much money on.
The assumption being --
When 95% of your budget is spent on program work, you're a fantastic, effective organization making huge strides in solving the world's problems.
On the other hand --
If you're only spending 70% or 60% (gasp!), you must be a poorly run, ineffective nonprofit with questionable ethics.
And websites that track this stuff like
Charity Navigator and
CharityWatch further perpetuate the idea that "overhead is evil" by giving their highest ratings to groups with the lowest overhead.
This trains us to think that any money spent on fundraising isn't money spent on the cause.
And what heartless, irresponsible soul would choose to spend money on fundraising when that money could be spent feeding hungry children?
But -- if investing money in fundraising means you can raise millions more to solve the hunger crisis, isn't that a smart investment?
Investing in fundraising is the only thing that is going to raise funds. It's the only thing that's going to increase the amount of money you have to tackle whatever enormous social problem you're trying to solve.
Instead of asking how much of my donation is spent on overhead, I should be asking about effectiveness, growth plans, staff turnover, and donor retention.
Who cares if you're keeping overhead low if you're not able to have a big enough impact to even make a dent in the problem?
And, on the flip side, who cares what the overhead is if these problems are getting solved?
Nonprofits need to invest in infrastructure and growth. Invest in your own strength, as
Dan Pallotta says. It's the only way you can get closer to the scale you need to actually fulfill your mission.
I know this isn't how most donors are thinking about it. And I know you can't suddenly start spending 40% of your income on overhead.
But I invite you to join me in challenging the prevailing belief that the percentage spent on overhead is how the health, effectiveness, and spending priorities of an organization should be evaluated.
Because if we don't come up with another way to think about it, we're never going to come close to changing the world.
And that's what it's all about, right?